Why are first-time buyers being locked out of the housing market?
A lending industry figure has urged for coordinated government and industry action following research showing millions of potential first-time buyers have been priced out of the housing market.
Tanya Elmaz, director of intermediary sales at specialist lender Together, responded to the Building Societies Association’s (BSA) latest Property Tracker survey, which found 43% of renters had expected to own a home by now but have been unable to do so.
“In a country where home-ownership is one of the foremost aspirations, the Building Societies Association latest research shines a light on the two major issues – first time buyers’ ownership and affordable housing,” Elmaz said.
The BSA survey revealed that among renters aged 25 to 44, typically the prime age range for first-time buyers, 59% had anticipated purchasing a property by their current age. However, affordability barriers have prevented them from achieving homeownership, with 61% citing difficulty raising a deposit as the biggest challenge.
Government initiatives welcomed
Elmaz acknowledged the scale of the challenge facing policymakers but pointed to recent government initiatives as positive developments.
“The government doesn’t have a magic wand and changes will take time. However, the introduction of the Planning and Infrastructure Bill in March, designed to streamline planning permission and speed up house building, and the £39bn cash injection for social and affordable housing at the Spending Review in June, are steps in the right direction,” she said.
Concerns over high LTV lending
The Together executive also referenced the Chancellor’s recent Mansion House speech, which included the launch of a permanent mortgage guarantee scheme providing access to 91% to 95% loan-to-value mortgages for first-time buyers.
However, Elmaz raised concerns about the long-term implications of such high loan-to-value lending.
“This low-deposit scheme raises questions of long-term affordability, as borrowers will be paying more over the life of their mortgage, so they must be supported by strong financial advice from brokers,” she said.
Market confidence remains low
The BSA research found that confidence in the housing market remains subdued, with only 15% of those surveyed believing it is a good time to buy property, down from 20% at the beginning of the year.
Elmaz emphasised the importance of coordination between different parts of the housing sector to address the crisis effectively.
“These efforts, so long as they are joined-up and work in step with high street and specialist lenders, will go some way to alleviate the barriers to entry on the market for all; and in time should boost consumer confidence,” she said.
Eyes turn to Autumn Statement
Looking ahead, Elmaz highlighted the upcoming Autumn Statement as a key moment for further government action.
“All eyes will soon turn to Autumn Statement and what more the Chancellor can do to rectify long-term challenges within the residential property market,” she said.
The BSA study estimated that since 2006, 2.2 million potential first-time buyers who would have been expected to purchase their first home have been unable to do so, highlighting the scale of the housing affordability crisis facing the UK.
What steps do you believe lenders should take to address the ongoing housing affordability crisis? Share your insights in the comments below.
