They were once as common as pigeons in Trafalgar Square, but in recent years first-time buyers have become extremely rare birds. Spiralling house prices, eye-watering deposits and fears of unmanageable debt added to that great imponderable of choosing exactly the right time to buy have been good enough reasons to discourage all but the most hardy of first-timers.
However, a recent flurry of reports points to a change in outlook. A general rise in confidence in the property market means that first-time buyers are returning to pore over property details in estate agents’ windows and trawl property websites in search of their first home.
Alix Stuart-Bruges, of Douglas & Gordon’s Clapham Southside office, has seen this increase first-hand. He says that buyers hoping to get on to the property ladder now account for about half of his inquiries — a sharp increase on six months ago. But he has also noted a change in first-time buyers’ circumstances. He says: “Until a couple of years ago the majority of first-time buyers were single professionals in their mid to late twenties; they now tend to be in their late twenties to early thirties and quite often buying as couples. We recently had one couple in their early thirties who bought a two-bed flat overlooking Clapham Common at £340,000.”
A budget of £340,000 may not be the norm for a first home (according to the Office of the Deputy Prime Minister, the average first property costs £144,500) but, like the rise in age of first-timers, the average spend on a first home is also on the up. Richard Donnell, of Hometrack’s research division, says that property has become less and less affordable, forcing people to rent for longer. When they do buy, they are doing so as couples, as cohabitees or with their parents’ help. Donnell says: “The average household income for a first-time buyer in London is £46,500 and the average deposit for a first home is 1.2 times that. There are first-time buyers, but they are quite wealthy.”
Some buyers have already been left behind by rising property prices. Sophie Gist, a 29-year-old marketing co-ordinator, and her husband, Damon, a 33-year-old sales assistant, live in Brighton and have a combined salary of £40,000. They have spent the past 18 months saving £7,500 to cover the deposit and buying costs, but constant searches on websites such as Propertyfinder.com have proved fruitless because many agents do not have anything in their price range. Sophie says: “We only have £120,000 to spend, whereas there are people out there with £220,000. The frustrating thing is that we’ve got conveyancers ready, we’ve got the deposit ready, we’ve had the mortgage approved. We could move tomorrow, but we just can’t get any further.” The Gists have been offered larger loans, but they are wary of over-stretching themselves. Sophie says: “We could get a bigger mortgage, but we don’t want to be a repossession case.”
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Keith Rigby, of the Ladbroke Grove office of the estate agent Bective Leslie Marsh, says that competition for first-time buyer properties is common: “We don’t have enough one and two-bed flats on the market to satisfy the renewed demand from first-time buyers. Those buyers not up to speed might find they are left behind in the scramble to get onto the property ladder.”
Other buyers, such as 28-year-old Kit Woodman, cannot afford to buy near where they work and are deciding to invest elsewhere. Kit is based in London but is looking with a friend to buy for about £90,000 in Nottingham. He says: “I am doing this purely because I want to get on the property ladder and this is a way of doing it. If I wanted to buy a similar house in London it would be £350,000. Even if I was earning £60,000 I wouldn’t be able to get a mortgage for that amount.”
Some first-time buyers have been more fortunate, spending time living rent-free to save for a deposit. Fazeel Yousaf, 27, and his wife, Dr Omera Khan, 29, got married in July 2004 and have been living with Fazeel’s parents in Stretford, Manchester. They are in the process of buying a one-bed off-plan flat in the centre of the city through Savills. Fazeel, who works for Barclaycard as an account manager, says: “We earn about £50,000 between us, and we each put half our salary away every month to save up for a deposit — living with my parents made it a lot easier because we weren’t paying rent.”
What the future holds for first-time buyers will depend on factors such as rent levels, interest rates and the employment market. But Donnell says that although the number of first-time buyers is up on last year, home loans to first-time buyers still account for only 30 per cent of the new mortgage market — down from just under 60 per cent in 1994. He expects the number of first-time buyers to continue picking up slowly, but offers some words of advice:
“Research what you are are paying. It’s worth spending every Saturday trawling around looking because you’ll be in a much better position when you come to make your move.”
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STARTING OUT
Home ownership had long been on the wish list for Simone Whitehead and Neil Dunham but they didn’t hold out much hope of achieving their goal quickly. “Even on fairly OK wages, it is impossible to get enough together to buy more than a shoebox in the back of beyond,” says Simone.
The couple both earn salaries in the mid-£20,000s — Simone works in human resources in the City and Neil is a travel agent in Central London. They rent and were planning to start putting money aside for a deposit, but they knew it would take them about two years of scrimping and saving. Fortunately Neil’s parents came to the rescue, offering to lend them enough to cover a 5 per cent deposit. They saw no reason to wait. “The sooner we got on the property ladder the better; the longer we left it the more likely that it would become even pricier,” says Simone.
After two weeks of hunting, Simone, 27, and Neil, 28, put an offer on a £155,000 one-bedroom garden flat in Hither Green, southeast London. Even though their lender was willing to lend more, the couple did not want to be overstretched or sacrifice holidays and going out. Ideally they would have moved to Kent to be near family and friends, but the cost of commuting would have been too high. Simone says: “The train fare is about £250 a month and with both of us working in London it wouldn’t have made sense. In the end it was about finding a compromise.”