Rented home demand to remain strong as FTBs put off buying

Rented home demand to remain strong as FTBs put off buying

8:03 AM, 25th November 2022, About 2 years ago

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More than a million Brits under the age of 45 could rule themselves out of the first-time buyer market due to financial pressures caused by the cost-of-living crisis, a survey reveals.

The findings from Aviva focused on under 45s who have never owned a property and found that just under half (46%) of them are not currently house hunting.

They say that they intend to in future, but 16% say they have no intention of doing so.

Of these, one in five (20%) specifically cited the cost-of-living crisis and inflation as making buying a house unaffordable.

Forced to shelve plans to buy for the first time

If these attitudes were reflected proportionally among those who are not homeowners across the UK, this equates to more than a million people under 45 being forced to shelve plans to buy for the first time.

The survey also shows the cost of a mortgage is being substantially underestimated, with the potential to dissuade more people from moving onto the property ladder.

Across the country and all age groups, survey respondents intending to buy or in the process of buying their first property say they expect to pay £196,700 on average and anticipate putting down £25,210 as their deposit.

Based on these figures, they say they are expecting a monthly mortgage payment of £718.60.

However, when these figures were put into a high street building society online mortgage calculator, the results show that those buyers would be paying £1,103.86 per month on a 2-year fixed deal, or £928.07 monthly on a 2-year base rate tracker – that’s an underestimation of up to 54%.

‘People juggling competing financial demands’

Matt McGill, the managing director of Aviva Equity Release, said: “The cost-of-living crisis, and other factors resulting in higher inflation and interest rates, have put pressure on people juggling competing financial demands.

“Events of the past few months have created uncertainty; nobody can predict the outlook for the coming months with any confidence.”

He added: “Despite resilient housing market activity, it now appears rising mortgage rates are dissuading many from taking that important first step onto the property ladder.

“In years to come, this will have a knock-on effect on younger people today.

“Wealth held in property contributes greatly to someone’s overall assets and can be used as a valuable source of funds, particularly later in life.”

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