"Many younger people looking to take their first step on the property ladder have seen their earnings and job prospects hit hard, impacting their dreams of homeownership."
The study, which analysed the opinions of 12,000 UK adults, found that while the pandemic made homeownership a bigger priority for nearly two-thirds (63%) of first-time buyers, more than four in ten (44%) delayed their plans to buy a home in 2020.
Despite Bank of England reports that the pandemic has enabled many households to accumulate more savings, less than one in five (17%) first-time buyers said lockdown enabled them to save more money for a deposit, compared to 31% of all buyer types. Nearly half (47%) of first-time buyers said they delayed their buying plans due to concerns about their personal finances.
Alongside this, over half (54%) believe that financial support for first-time buyers from the Bank of Mum and Dad will be less available post-pandemic. ONS figures show that redundancies among the over-50s almost tripled over the last 12 months contributing to financial pressures for parents who might previously have been able to support their children in raising a deposit. Estimates suggest that on average, the Bank of Mum and Dad provides more than £18,000 of financial support to a first-time buyer.
As a result, over half (52%) say that raising a deposit is the biggest issue facing first-time buyers today, an increase on the 30% who identified this as the key barrier in Santander’s 2019 first-time buyer study.
Meanwhile, Santander's analysis found that while the stamp duty holiday introduced in June 2020 was clearly an incentive to homebuyers, just 22% of first-time buyers said they were encouraged by the holiday, compared to 46% of second home buyers and 44% of buy-to-let buyers.
Almost half (47%) of first-time buyers say the pandemic has made traditionally more expensive, inner-city living less desirable while rural and coastal living has increased in popularity among all buyer types.
However, the result of this could be that regional house prices grow disproportionately quickly with the emergence of new ‘virtual commuter belts’ - areas increasing in popularity which would previously have been discounted as being too far from their place of work. Already house prices have grown almost twice as fast in Wales (11.0%) and the North-West of England (10.5%) as they did in London (5.7%) during 2020.
As a result, first-time buyers may find themselves priced out of a growing number of areas, with 33% saying that finding an affordable property in their preferred area is a barrier to ownership – three times the 11% who cited this as a barrier in 2019.
Over one in ten (13%) first-time buyers said they had delayed plans to move home while there was uncertainty on what their future remote working policy might be.
Tracie Pearce, chief customer officer at Santander, commented: “The impact of the pandemic on the housing market has been significant with many people reassessing what they want from their homes. Mortgage providers have seen huge demands while brokers have been quick to support with online advice and flexible hours to help customers incentivised by the booming market and government support with stamp duty. However, despite the support and advice available, many younger people looking to take their first step on the property ladder have seen their earnings and job prospects hit hard, impacting their dreams of homeownership.
“Our report highlights that it is now really important that industry and government reflect on the last year and work together to make defining changes to support a new generation of first-time buyers.”
