The proportion has fallen from 31% to 22% in the space of 12 months, and now stands at the lowest level we have recorded since starting the quarterly Rightmove Consumer Confidence Survey.
Miles Shipside, director of Rightmove, comments:
From nearly a third identifying themselves as likely first-time buyers in July last year, their numbers have now dwindled to just over 1 in 5. This is around half the proportion traditionally required to give the market a healthy balance. With the number of prospective buyers at the bottom of the chain being half of normal levels, the question sellers further up the chain will be asking is; who will be at the bottom of my chain?
There have been recent signs of a slight relaxation in the deposit demands of lenders, though the evidence from this survey suggests that it is not having the desired impact of motivating their target audience to get onto the housing ladder.
This forward-looking survey of over 22,000 prospective home-movers is a cause for concern, as we are seeing that the number of first-time buyers set to enter the market is dwindling. A sign of a sustained recovery will be when first-time buyers return to the market in far greater numbers. Only by there being a greater proportion of chainless buyers can we return to a more fluid market.
Shipside adds:
Many of those who should be buying for the first time have declared themselves as non-participants in the housing game. Due to the new deposit rules they have to play by, it comes as no surprise that they are staying away as they are probably busy saving.
"The onus now falls upon previous owner-occupiers moving out of rented accommodation as well as investors to take up some of the first-time buyer slack. There is a heavy weight of expectation on the hopedfor activity of these chainless groups but they are also restricted in their ability to raise the necessary finance to proceed.
However, it does not appear that the prospect of falling prices is a deterrent to many would-be first-time buyers. Indeed, 73% of those surveyed stated they believed that prices would be about the same or higher 12 months from now. Only 20% felt that prices would be lower, though this has risen from 13% in the last quarter.
Shipside says:
The nervy minority expecting prices to be lower in a years time has grown to 1 in 5, though twice as many say that prices will be higher at the same point. Those that believe prices will be lower may be seeing it as an opportunity to pick up a bargain, whilst those who forecast higher prices may be looking to get on the housing ladder before it gets out of reach. A lot will depend on local market conditions where people intend to buy.
The survey also asked potential first-time buyers to identify their single biggest concern around buying. 55% of respondents cited mortgage related issues, such as raising a deposit and funding the monthly repayments. Interestingly only 6% expressed concerns over job security.
These findings tie in with the views of renters, 60% of whom state that they would like to buy but cannot due to affordability. Mortgage availability, earnings and property prices are the main factors that influence affordability. This could be enhanced by cheaper property deals if prices stagnate or fall back and are outstripped by inflation and wage rises.
This is also the first substantive survey of genuine first time-buyer intentions since the relaxation of stamp duty for purchases below 250,000.
The largest potential savings are likely to be for those looking to buy for the first time in the London area, where prices to get onto the property ladder are considerably higher. It is interesting to note that London recorded the highest proportion of those intending to buy for the first time, 39% compared to the national average of 22%.
