It is going to take a joint initiative from lenders, property developers and the Government to halt the departure of young first-time buyers (FTBs) from the property market.
Increased interest from buy-to-let investors is fuelling house price rises which are forcing more people to turn to rented accommodation according to market analyst Datamonitor.
Alex Boorman financial analyst at Datamonitor said Government programmes such as the Starter Homes Initiative were inadequate to deal with the problem. He said: ‘In addressing the first-time buyer problem there is a role for lenders, the Government and even for property developers who must ensure that they provide attractive but affordable housing.’
Datamonitor’s newly-released report, First-time buyers in the UK mortgage market, states that the average deposit for FTBs has risen to £22,547 (250%) in the last five years, with the figure rising to £37,123 (264%) for those in London.
Boorman, said: ‘FTBs are staying away from the market. Property prices are being buoyed by other sectors such as buy to let ‘ where growth is being fuelled by potential FTBs who cannot afford today’s prices.’
Richard Donnell, head of FPD Savills Residential Research, said the number of under 25-year-olds buying property had almost halved since 1990. At that time they accounted for 30% of buyers, falling to 17% in 2002. He said: ‘Affordability constraints will continue to be a major barrier to FTBs looking to enter the market ‘ we expect the average age of the FTB to increase beyond the current average of 33.’