Research conducted by the Building Societies Association (BSA) revealed just 17% of people believe it would be a good idea to buy a home now, down from 20% in January – the last time the survey was carried out.
In contrast, 38% of people said it was not the right time to buy a property.
Mortgage affordability still main challenge to homeownership
Even though mortgage rates have continued to fall, mortgage affordability was cited as the main barrier to people buying a home, as said by 61% of respondents. This rose to 65% among prospective first-time buyers.
Raising the required deposit was also named as a challenge, according to 59% of people. This was even more true for first-time buyers, with 62% saying so.
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The third-biggest barrier to buying a home was getting a large-enough mortgage, as said by 42% of respondents, while 30% said the stamp duty tax was a challenge. This was higher than the 22% of people who felt stamp duty tax was hindering their chances of buying a home back in January, indicating the impact of the thresholds rising in April.
Some 26% of people said job security was a challenge for them, up from 21% who said the same in September last year, which the BSA said highlighted a potential issue.
BSA said while house price growth was relatively stable at an annual rate of around 4%, 46% of respondents expected values to rise in the next year and just 13% thought prices would fall.
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Paul Broadhead, head of mortgage and housing policy at the BSA, said the biggest concern was that the survey revealed the affordability issues faced by first-time buyers.
He added: “Many feel that the dream of homeownership is clearly nothing more than that, a dream, particularly those not fortunate enough to have family who can provide financial support.
“It’s not surprising that sentiment in the housing market has declined overall, with the recent changes to stamp duty meaning pretty much every house purchaser will now pay more. But for first-time buyers, the extra stamp duty tax [that] they now need to pay is substantial and increases the already significant burden of raising the upfront costs required to buy a home.
“A thriving housing market needs first-time buyers to be able to get on the property ladder. But the prospects for many of today’s would-be first-time buyers look increasingly challenging.”
Broadhead said: “A further bank rate cut when the Monetary Policy Committee meets in a couple of weeks should help to improve sentiment in the housing market, but to have a meaningful impact, radical changes are required.
“A starting point must be improving the balance between housing supply and demand. The government has set an ambitious target for building more homes, with some bold statements on planning processes. But we now need action, not words – more homes [that] are more affordable and more appropriate to the needs of those living in them.
“Alongside this, regulation must be adapted to enable lenders to address the barriers facing first-time buyers. This is under review, but we need bold and quick action if we are to avoid a growing generation of lifetime renters.”
