Number of first time buyers in the 25-29 bracket is increasing – as predicted!

publication date: Nov 12, 2015
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Number of first time buyers in the 25-29 bracket is increasing – as predicted!

One of the things that really annoys me is when numbers are used that put people off doing something they should actually be doing and in this case that’s saving for their first home!

Three regular errors on reporting renting and first time buyer property stats
There are three main stats which are being, in my view, misreported to consumers and mean that people think they can’t buy, when they can.

It’s NOT cheaper to buy than rent in many cases across the UK
The two indices that claim it is cheaper to buy than rent assume renters have a 27% deposit ‘kicking around’.

When you compare buying a property with a 95% mortgage instead of an 83% loan to value (which is just the ‘average’), it’s often thousands of pounds cheaper to rent than buy.

See my latest rental update

First time buyers DON’T need tens of thousands of pounds for a deposit
Nor do the average house prices versus average wages make much sense either – what FTBs need is stats that are relevant to them.

Just because first time buyers ‘on average’ do put down a 27% deposit, doesn’t mean this is the amount others HAVE to find to buy a home, they don’t.

5% is typically the actual amount first time buyers need, which is just a sixth of the amount they are currently able to find, many thanks to the bank of mum and dad, or grandma and grandpa! But if this isn’t available, all is not lost.

And it’s the same for ‘average price paid’ by first time buyers. Take the East Midlands for exampe, yes the average paid might be over £130,000, but the majority of properties in Nottingham City Centre cost less than £100,000 and you can secure a two bed terrace for just £60,000 in an OK area. So first time buyers here can easily get on the ladder, especially when you then add in offers via shared ownership for £50,000 or less.

The LSL index shows that most first time buyers can get on the ladder for less than £100,000. It might not be the perfect area or property, but the trick with getting ‘up’ the housing ladder is to get on it first, then use the additional equity to help you trade up to the next house or area you want to live.

And remember, just because a first time buyer can’t afford to live where you are now, doesn’t mean they won’t be able to in the future. I didn’t buy where I wanted to and had to get on the ladder by buying with a friend, then I progressed up the ladder using equity earned to buy a better property each time. However, this involved trading up and down umpteen times before I got settled in the home of my dreams after 11 years.

First time buyers are mostly aged between 25-29 years old
During the recession there were many headlines saying that the average age of FTBs was increasing. Well that wasn’t a big surprise to me and shouldn’t have been to anyone else either.

If in 2007 as a potential first time buyer you saw property prices crashing around your ears at the age of 29 and not recovering until 2013, six years later, when you were 35, why would you buy?

And latest stats from the Council of Mortgage Lenders confirms that the biggest number of buyers is in the 25-29 year old category:-



Source: https://www.cml.org.uk/news/723/

We need to report stats to help FTBs, not scare them
Just because the stats say ‘this is what FTBs are doing’ doesn’t mean it’s what they have to do to get on the ladder and it is really unfair on those who are living in rented accomodation to constantly tell them how badly off they are, when many have actually made sensible financial choices and put others off from saving making them believe they have no chance of getting on the ladder – ever – so why bother?

For more information and help on reporting real conclusions from property statistics, do contact me.


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