88% of young adults can’t afford to buy a homeMake Text Bigger
Seven out of eight young adults do not believe they can buy a home of their own in the next five years, according to research by the Post office.
Instead, they will rent buy to let homes or stay with friends, parents or relatives.
Despite government help with the FirstBuy scheme, few expect to save enough cash to fund buying a home.
The research discloses that the average first time buyer expects to save a deposit of 16% – and with the latest land registry figures putting the price of an average home at around £166,000, that means accumulating around £26,560 in cash.
The Post Office reckons many potential first time buyers are optimistic about their chances of securing the keys to their own front door.
Just over one in five expects to buy before the end of 2013 and one in seven intend to buy before the end of this year.
Around half (45%) are confident about funding the deposit themselves. The rest are banking on help from partners and family, including 10% waiting for an inheritance.
Mike Cook, head of mortgages at the Post Office, said: “First time buyers are the life blood of the property market and our research shows that challenging stories about first time buyers and wider economic issues have not dampened aspirations to get on the housing ladder.
“It is also interesting to see that despite the resurgence of 10% deposit mortgages recently, the average first time buyer is aiming for the cheaper rates available at 15% or 20% deposit – even if it takes that bit longer to save.”
First time buyers need to find cash for more than just a deposit – most lenders charge arrangement fees for the best deals, while legal costs, surveys and stamp duty add to the bill.
“With the end of stamp duty exemption for homes costing below £250,000, first time buyers will now have to find the money for stamp duty as well as their deposit,” said Cook.
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.