Over 1.3 million non-homeowners hope to pay less than the average house price for their first home, new research reveals.
Alliance & Leicester Mortgages quarterly Moving/Improving Index claims first-time buyers are in a bargain hunting frame of mind, as three in four (75%) who are currently renting or living at home with their parents are setting their sights on buying a property costing less than £184,152, the current national average.
This compares to nearly 300,000 first-time buyers in the UK who plan to spend over the national average house price on their first home, says the lender. It claims 15% of prospective new buyers, who are currently renting or living at home with their parents, plan to spend between £184,000 and £250,000.
Stephen Leonard, director of mortgages at A&L, says: "Our survey reveals that most first-time buyers are pragmatic about the amount of money they can afford for their first home. With the majority choosing to look at houses below the UK national average, affordability is first and foremost in their thoughts. First-time buyers are in a good position to take advantage of the positive moves lenders are taking to ease their financial burden."
Leonard adds: "Now, lenders such as Alliance & Leicester, are enabling more buyers to get on the housing ladder in a responsible manner by introducing greater lending flexibility which will give prospective buyers something to cheer about."
Non-homeowners are more confident about buying this quarter, according to the research, and overall, they are more upbeat about their ability to afford a house this quarter. Fewer renters and those living with their parents feel they cannot afford a property (22%, says the report) compared to the previous quarter when 28% of those asked felt they could not afford to get onto the property ladder.
Of all the regions, people in the East of England are the least confident about getting onto the housing ladder as nearly a third (30%) feel they cannot afford to buy, while those in the South West are most confident as only one in ten (11%) feel the same way.
Parents are giving their children the opportunity to save towards getting onto the housing ladder as the research reveals living at home is still the favoured option for many. Those in their 20s appear most reluctant to leave home with one in four (25%) choosing to continue to live with their parents.
Of this group, men in their 20s make up the majority and are, says A&L, and are 50% more likely to live at home with their parents than women, 56% of women in their 20s choosing to rent compared with 40% of men. Of all the regions, Londoners are most likely to live at home and they are twice as likely to do so as those in the East Midlands.
Leonard says: "Living at home with parents provides a chance for those wishing to get onto the housing ladder to benefit from no, or low rent, while enabling them to kick-start their savings for a deposit towards a house. This also signifies a shift in social trends with more young men choosing to live at home than women. For the last two quarters we have seen more men in their 20s indicate that they would rather stay put with their parents than flee the nest."
Among the others findings of the report, it is revealed the average age of a first-time buyer is still 34, but over half of non-homeowners in their 30s (53%) now say they do not want to buy a property.
Londoners represent the biggest population of renters, as 43% of Londoners choosing this form of housing compared to 20% in the South-west, reflecting the relative affordability of property, says A&L.
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