First-time buyers are now older and need to earn more

Posted 26 July 2016 by Ben Salisbury

A new English Housing survey shows that more first-time buyers are couples, they are older and they earn more than the average wage

A new survey highlights how the age of first-time buyers and those thinking of buying their first home has increased over the last 20 years from 30 to 33.

But to be able to do this, potential homeowners have to be earning a premium wage. The survey found that actual first-time buyers had an average annual income of £43,000, compared to £27,000 for the average household.

The latest Nationwide House Price Index for June showed the average house now costs £204,968, a 0.2% increase.

Strict lending criteria and affordability checks, along with rising prices have combined to make it more difficult for first-time buyers to get on the first rung of the property ladder.

First-time buyers

The Office for National Statistics (ONS) English Housing Survey found that the average age of first-time buyers went up from 30 to 33 between 1994-95 and 2014-15, though the proportion of first-time buyers were still aged 25-34, similar to 20 years ago.

Over the same period the proportion of first-time buyers aged 16-24 dropped from 23% to 10%, while the proportion aged 35-44 went up from 11% to 20%, while the proportion that were single rather than couples halved from 29% to 14%.

In total, 80% of all first-time buyers were coupled, significantly up from 1994-95, 63% and 2004-05, 62%. The ONS said this could be due to an increasing need to have two incomes to be able to afford to buy.

The proportion of first-time buyers who were couples with children increased from 20% to 31%.

The survey also illustrates the increasing role played by the ‘bank of mum and dad’. First-time buyers who had help from friends and family rose from 21% to 27%, whilst those that used inherited money as a deposit on their first home went up from 3% to 10%.

Expectation to buy

Plans to get onto the property ladder declined among private renters over the last two years, pointing to a rise in the number of people who think they will never own their own home.

However, there was a marked difference in expectations between private and social renters. 57% of private renters expect to buy a property at some point in the future, down from 61% in 2013-14, compared to just 24% of social renters where the ratio remained the same.

The proportion of private renters aged between 25-34, who expect to buy there own home in the future, fell from 78% in 2013-14 to 71%, for 35- to 44-year-olds there was a drop from 68% to 60%.

For social renters, the proportion of 45-54-year-olds expecting to buy went up from 15% in 2010-11 to 24% in 2014-15. In the private sector for this age group these ratios changed to 33% and 48% respectively.

Couple with children were more likely to expect to buy a home in the future than couples without children or single households.

In 2014-15, of all households renting who expect to buy a home in the future, 28% were couples with dependent children.

For all renters, the most common reason for not buying their own home was affordability with 65% of private renters giving that reason and 66% of social renters. Interestingly, 9% of renters said the reason they did not expect to buy a home is because they like living where they do and 1% prefer renting because of its flexibility.

Mortgage applications

The number of social and private renters who considered getting a mortgage rose to 10% in 2014-15, up from 8% the year before. The majority of these households who did apply for a mortgage had it approved, 80% against 20%, and the rate of approvals has increased since 2010-11.

Affordability

The survey found that there are 1.5 million households that contain an adult who would like to buy or rent their own accommodation but cannot afford to do so, mainly in owner-occupied homes with a couple living with independent children, the majority of whom were in part-time or full-time work.

Campbell Robb, Shelter’s chief executive, said: “These figures are a glaring reminder that this country’s drastic shortage of genuinely affordable homes means for millions finding a place to call their own is fast becoming out of reach.

“Instead more and more people on ordinary incomes have no choice but to face a lifetime of expensive, unstable private renting, unless they’re lucky enough to have help from friends and family.


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