However, among the debris of annual round ups, monthly figures and office parties, the NAEA released news that showed that sales made to first time buyers have recovered slightly from a previous three-year low. The percentage of sales to first-time buyers increased marginally from October, moving from 16pc to 19pc in November. This is by no means a recovery but it offered a ray of hope.
There are some indicators that offer a positive outlook for first time buyers. House prices have seen minimal growth comparatively since the credit crunch hit in 2007 and first time buyers are unlikely to face much higher asking prices in the medium term. This helps first time buyers, for whom there is less pressure to get on the property ladder at any cost and make a purchase in haste and repent at leisure. It also gives more scope to save up a decent deposit to help keep mortgage repayment costs low and reduce the risk of falling into negative equity in the future.
Nonetheless, deposits have been for some time the single biggest issue facing first time buyers. With as much as 20% of the property price required, a typical first time buyer will be saving for over five years (based on average savings rates and lower end property prices in various parts of the UK). And that’s a tough call if they are also being squeezed by rents.
But though deposits are onerous, many first time buyers are scared that the required amount is even bigger. In recent research conducted by the National Centre for Social Research over 2/3rds of non-home owners in the 20-45 age group, “Generation Rent”, thought they had no realistic prospect of ever owning their own home. The perceptions are that deposits are higher than actually required and affordability assessments and criteria hurdles mean they see no point in saving or trying to buy.
The greatest source of help for first-time buyers continues to be parents or other family members. Unsurprisingly, research published earlier this year found that 84 per cent of new buyers relied on financial support from their parents to help them on to the property ladder. In many cases this will just be a cash gift – or an interest free loan – and a growing number of lenders allow a parent to act as a guarantor on the mortgage, which can help where affordability or LTV are not quite there.
These are chinks of light for first time buyers but my feeling is that we have too little momentum. The failure of Stamp Duty relief to inspire a first time buyer boom prompted the government to announce its withdrawal in March of this year. Now policy makers are prioritizing more effective measures which they believe will provide better value for money. Ultimately no-one, not even the CML, argued this relief significantly lifted first time buyer demand. It may arguably have stopped first-time buyer demand deteriorating further but this is difficult to assess. More needs to be done but few are convinced the latest initiatives to help first time buyers will have a material impact on the property market, given that purchases will be limited to new homes.
For their part, lenders could embrace a traditional approach and offer favourable terms to people with a track record of saving with them. And we are already seeing building societies re-establishing their central role in their communities by offering a level of support through knowing their customers and the local market that perhaps more automated underwriting processes simply cannot provide.
First-time buyers accessibility to the housing market remains a huge challenge but I still think confidence is perhaps the biggest obstacle. Products and loan-to-values are improving, and parental support is being actively welcomed by many lenders, alongside the fact property prices are stagnating.
However, issues in the broader economy, such as public sector cuts, employment, the significant increases in university tuition, and final salary pensions to name a few, are affecting confidence across the market. Rents, cost of living and interest rates are eating into money that might otherwise fund deposits.
This is a serious situation, and the importance of it cannot be underestimated. A generation of young people denied access to the underpinnings of financial stability – a job, a home, a pension – is unable to buy into adulthood, marriage and the business of raising children in a secure environment. The mortgage market is making moves to help first time buyers but the broader economic issues will continue to hamper significant progress.
Alison Beech is head of surveying service Valunation and business relationship director at Spicerhaart