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First-Time Buyers More Optimistic, but Still Face a Struggle

The Q3 2017 First-time Buyer Index from Aldermore bank found that 35% of first-timer buyers believe that buying their first home will be extremely difficult. This is a drop from the 39% who felt the same in 2016.

Obstacles Facing First-Time Buyers

The study looked at what obstacles first-time buyers were still facing in trying to get on the property ladder. It found that raising a deposit and property prices continue to be the biggest concern for first time buyers across the UK. Mortgage affordability and difficulties’ securing a mortgage are also increasingly causing issues. Over one in ten (12%) believe mortgage affordability is an obstacle to getting on the ladder, in comparison to just one in twenty (5%) in 2016.

Light at the End of the Tunnel

When it comes to saving a deposit, first-time buyers are more willing to go it alone and are slowly becoming less reliant on friends and family to help them save.  Three in five (59%) are currently living with or would consider living with family and friends to get on the ladder (down 10% from 69% in 2016).
For many first-time buyers, their first purchase will only be a temporary home. Around 24% say they only intend to live there for no more than four years before moving on to what will hopefully be their dream home. A further third (33%) expect to live in their first home for five-nine years.
“Over the past year we have tracked the outlook for first-time buyers as well as the obstacles they are facing to get on the property ladder,” commented Charles McDowell, Aldermore’s Commercial Director, Mortgages.  “While the situation is by no means easy, there does seem to be light at the end of the tunnel for those trying to buy their first home.  Although property prices remain a hurdle, slower house price increases has given a glimmer of hope to those trying to get on the ladder for the first time. Instead, mortgage affordability and difficulties in securing a mortgage are becoming more of an issue for first-time buyers.”

First-Time Buyers Spend More than Planned

Property website Zoopla also recently conducted research into first-time buyers, this time looking at the amount they spend on their first property purchase.
The study found evidence of a large gap between what first-time buyers think they will spend on their first home compared to what they actually end up spending. It revealed that first-time buyers estimate they will spend an average of £167,359 on their home, but the actual cost comes to £211,599 – a difference of nearly a quarter of their original budget (23%).
Perhaps unsurprisingly, first-time buyers in London have the biggest ‘reality gap’, with expected average spending of £259,158 compared to an actual spend of £386,667 – a difference of £127,509 (39%).
It’s not just the financial burden of buying a first home that is underestimated, but also the amount of time it takes to save for a deposit. The research revealed it takes the average first-time buyer 26 months to gather a down payment – four months longer than those intending to buy their first home predicted (22 months).

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