The Building Societies Association (BSA) Property Tracker survey of 2,099 people found that those who felt now was not the time to purchase rose to 59 per cent among first-time buyers.
Some 18 per cent think now is a good time to buy, an improvement on the 14 per cent who felt the same in December.
Monthly mortgage payments were found to be the main barrier to homeownership, with two thirds of respondents citing this as a factor. The BSA said the level of people naming rising costs as a hindrance to owning a home had steadily risen each quarter since December 2021 as interest rates went up.
Some 57 per cent of people said raising a deposit was holding them back.
Sentiment towards the housing market varied across regions as 72 per cent of respondents in the South West said affordability was a barrier to buying a home while in London, this number fell to 59 per cent.
People in the capital are more likely to think now is a good time to buy, with 23 per cent saying so. This was the highest level of people in London suggesting it is the right time to purchase. By contrast, just a tenth of respondents in Wales think it is appropriate to buy a new property now.
The BSA said the relative optimism of Londoners could be down to slower house price growth in the region. Although house prices are higher than anywhere else, prospective buyers may consider it to be affordable in comparison.
Paul Broadhead (pictured), head of mortgage and housing policy at the BSA said: “It’s good to see small signs of improved sentiment in the housing market, but I expect it will be some time before we see some momentum returning to the housing market.
“The significant increases in all areas of expenditure, including the rising cost of mortgages, will mean that many households’ finances will be under pressure. Affording mortgage payments and raising a deposit will therefore continue to be the main reasons preventing people from buying a new property for some time to come.
“The situation is even more difficult for first-time homebuyers. They not only face the higher cost of living but this, alongside higher mortgage costs, will affect the amount they can borrow and therefore the property they are able to buy. Many will need to reassess their ambitions as they will be unable to achieve what they might have two years ago before the cost of food, fuel, energy, and interest rates started to rise. With affordability stretched, we are likely to see downward pressure on house prices this year.”
House price expectations
Almost a quarter, 24 per cent, of respondents expect house prices to rise over the next 12 months, higher than the 16 per cent who thought so in December. This rises to 29 per cent among those in the West Midlands but falls to 15 per cent for people in Wales.
Two fifths of respondents think house prices will drop, compared to 49 per cent in the previous quarter.
Homeowner confidence
Homeowners were found to be confident towards paying off their mortgages with 88 per cent saying they had no concerns about keeping up.
Just two per cent of respondents said they were not confident about keeping up with mortgage payments.
Broadhead added: “It’s good to see that only a very small proportion of people are particularly concerned about making their mortgage payments, with the vast majority remaining confident that they can maintain their repayments. However, there are around 1.8 million households coming to the end of their fixed-rate mortgage this year, and most will see a significant increase in their mortgage costs. Only time will tell whether this has been factored into their financial planning.
“Lenders are aware of the payment shock these borrowers will experience and have teams who are well trained and experienced in providing tailored support to those who may struggle.
“Our advice remains that anyone who is worried about their finances and ability to pay their mortgage should get in touch with their lender or a debt adviser as soon as possible. They will provide a safe space for a confidential, non-judgmental chat and will do everything possible to help each borrower with options based on their own personal circumstances.”
