A fifth of renters believe homeownership is achievable within five years, up from 16% last month and the highest level since February, according to data from Barclays’ Property Insights report.
Meanwhile, confidence in the housing market tipped back up slightly to 29% in August from 26% in July and 24% at the start of the year.
Household budgets under pressure
Housing costs remained front of mind, however, with 60% of households surveyed stating they were concerned about rising mortgage and rental costs. High house prices were cited as a major barrier to owning a home by almost half of respondents.
Mortgage and rent spending grew 4.4% year-on-year in August, down from 5.2% in July, following the Bank of England’s base rate reduction.
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Meanwhile, three-fifths of renters have seen or expect to see their housing costs increase this year, squeezing their ability to save.
The latest rental price index released by Hamptons showed that the average cost of renewing a rental contract in Great Britain rose by 4.3% in the year to August. Despite the rise, the monthly cost of renewing a tenancy was £90 per month cheaper than moving to a new rental property.
To manage expenses, Barclays said 40% of households are reviewing their budgets, 43% are cutting back on small luxuries, and 27% are reducing holiday spending.
This comes as four in 10 homeowners believe their mortgage payments take up too much of their monthly income. On average, homeowners report their mortgage accounts for 27.7% of their take-home pay, up from 26.6% in July.
Barclays’ data shows an increase in the popularity of 30-plus-year mortgage terms. Among first-time buyers, these account for 41% of purchases, as they are typically younger and so have longer to pay back a mortgage.
Forever homes for first-time buyers
Barclays’ mortgage data shows that three-bedroom homes are the most popular choice for properties, making up 46% of all purchases in August.
Millennial homeowners, aged 28-43, were the most likely age group to prioritise extra space – over a fifth said they bought a property with more bedrooms than they currently need to avoid upsizing later.
This compares to just 13% across all ages.
A third of recent Gen Z buyers aged 18-27 said they bought a forever home so they wouldn’t have to move. Nearly three in 10 of all recent buyers said they intended to stay in their new home for at least 10 years.
Jatin Patel (pictured), head of mortgages, savings and insurance at Barclays, said: “Our data shows that first-time buyers are not considering property merely to get a foot on the ladder but for the long term. Whether it’s to create space for a growing family, or to invest for the future, it’s encouraging to see young people feel slightly more confident in taking this significant step.
“It’s clear that buyers are still cost-conscious as 30-plus-year mortgage terms become more popular – this option helps consumers reduce their payments by stretching their borrowing over a longer period of time.”
