First time buyers drastically underestimate time to get on housing ladder

7th April 2014

There is a marked difference between the expectations of those hoping to get on the housing ladder and the reality, according to new research from Clydesdale Bank and Yorkshire Bank.

The Banks’ Annual First Time Buyers (FTBs) Survey suggests that two-thirds of those looking to buy their first home badly underestimate how long it will take to achieve their goal.

Half of those surveyed said that it had actually taken anything up to three years longer than they had anticipated to move in to a first home of their own.

The research suggests that expectations have changed over the last 30 years or so. Older respondents, aged 55+ were almost three times more likely to have bought their first home within their expected time-frame than those in their late twenties and early thirties, and twice as likely as the youngest FTBs, up to 24 years old.

While FTBs in London were most likely to have seen the reality take longer than they had envisaged, the pattern regionally did not simply match up to house prices. The Midlands, Wales and North West were all more likely than the UK average to feel that things took longer than they had hoped. Buyers in Scotland were most likely to have achieved their first home purchase within their timeline, with just under half believing it took as long or less than they’d planned.

The research showed that there were 4 main factors in the time it took buyers to get on the housing ladder. And, rather than it being the process itself that creates the delay, financial matters dominate potential FTBs’ thinking and actions when looking to buy. Almost a quarter  worry about getting a mortgage in the first place, closely followed by 20% looking to put together enough deposit, and one in six for whom job security means they do not want to take on the commitment of a mortgage. But for about a fifth of FTBs what takes time is finding the right property to call “Home”.

Across the regions there was some variation in how these for key factors affected the timing for potential FTBs:

Saving for a deposit itself was noted as taking a considerable amount of time for many. For a quarter of FTBs it takes one to two years to put together their deposit, but a third at 35% said it took three years or more. With a 95% and average deposit of around £7500, First Time Buyers need to save at least £300 each month just to get that together within two years. Other costs, like legal fees and furnishing their home can easily double the amount required, meaning saving more or for longer.

Andrew Pearce, retail director for Clydesdale and Yorkshire Banks, says: “Buying your first home is a big step and a major commitment, making sure you plan well ahead has never been more important.

“Planning starts with saving, the sooner you start the easier it is and the less you have to put away each month. Even with 95% mortgage, the average First Time Buyer needs to put together over £7,000 for their deposit. And that’s before the cost of valuations, legal fees and furnishing their home.”

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