One in three delay buying new home as high costs and interest rates bite
The saga of first-time buyers trying to get on the UK housing ladder is long and well documented.
High interest rates, rising costs and rents which swallow up more than a third of wages – in some parts of the country – have meant that around one in three people have delayed their purchase of a home, according to the Mortgage Advice Bureau, while a fifth have taken on an extra job to cope.
Nearly half have cut back on luxuries, while a third have cut back on socialising and 14 per cent have moved back in with their parents, according to new figures.
The average yearly pre-tax salary in the UK was £35,880 in July, while the average house price was eight times more, at £288,000.
In 1980, the average house price was only three times the average salary.
Increased housing prices, higher interest rates making monthly repayments unaffordable, and the cost-of-living crisis were among the key factors impacting homebuying plans, according to Mortgage Advice Bureau.
Around a quarter of first-time buyers have also been struggling with poor credit scores after the cost-of-living crisis, which has made it even harder for them to access an affordable mortgage.
One expert described the housing market as a “pressure cooker ready to explode” after July figures from the ONS put the yearly rent rise in the UK at 8.6 per cent.
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The Bank of England cut the base interest rate at the start of August and the market has priced in two further cuts to the rate this year.
A total of 1.5 million new homes are – theoretically, if not currently, in the works – set to be built, and many of those should – again, in theory – be affordable.
Both of these developments should ease the pressure on houses by reducing mortgage costs and increasing supply.
Estate agents have already seen demand for houses start to tick up in August.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “ On the ground, we’ve had a really busy August.
“We are agreeing sales in all price ranges. We are not seeing a high number of viewings as many people are away on holiday but that means the quality of the viewer has improved and they are more inclined to be decisive… Sentiment is positive,” she said.
Ben Thompson, deputy CEO at Derby-headquartered Mortgage Advice Bureau, said that prospective buyers shouldn’t wait to get their ducks in a row, or try to bet on the best time to buy a house.
“It’s important that buyers don’t try and time the market, as it’s nearly impossible to time the property market at the perfect sweet spot,” he said.
“For those not yet at the stage to sign on the dotted line or just starting out on the journey to homeownership, using a mortgage calculator can help you estimate how much you can comfortably borrow upfront… starting now and getting advice to become mortgage ready is key.”