The absence of first time home buyers puts the UK housing market in great peril. To say that part of the economy is in crisis mode is such an understatement. Around 20 per cent of those planning to buy a house now are first time buyers. The market, in order to be considered “healthy” needs around 40 per cent of the buyers to be first time buyers. There is great concern of a collapse, since there is no one present to buy the homes on the bottom of the ladder.
The reason for the absence of the first time buyer is the large amount of deposit required now. On average, a 25 per cent deposit is needed compared with 10 per cent before the crisis took charge.
Miles Shipside, director of Rightmove, commented on the status of the market saying: “With the number of prospective buyers at the bottom of the chain being half normal levels, the question sellers further up the chain will be asking is, ‘Who will be at the bottom of my chain?’”
He added that banks are demanding larger deposits, making mortgages less accessible to first-timers.
Mr Shipside said: “Due to the new deposit rules they have to play by, it comes as no surprise that they are staying away as they are probably busy saving.”
Data from the Council of Mortgage Lenders revealed some interesting statistics. Over 75 per cent of first time buyers under the age of 30 need assistance from their parents and that over the past five years the average age of unassisted first time buyers increased from 33 to 37.
Some of the unfortunate news from the first time buyer crisis is that a large number of economists believe house prices will fall for several years to come.