/ Home & Energy, Money

Property pessimism – are Brits scared of getting on the ladder?

Model house with words 'help me'

The recession has had a detrimental effect on the housing market over a number of years. But as mortgage lending has risen by 34% this year, have you finally started to get your property confidence back?

A new survey from the Building Societies Association (BSA) has been testing the mood of potential home-buyers, and found that one in four think it’s going to take them more than 10 years to save a deposit.

However, on the opposite end of the scale, another one in four said they thought they could save a deposit in less than three years, showing a huge range of different situations across the board. Regional discrepancies make a big difference, as those in the South East and London were found struggling to save deposits due to above-average property prices.

Scrimping and saving for a deposit

But it seems that the mood in the housing market remains pessimistic, as the BSA found that one in five first-time buyers believed they’d still be renting or living with family in 2022. On top of that, just 62% felt they’d be able to save a deposit in five years, compared to 88% in 2008.

From personal experience, it’s easy to believe that confidence in the housing market isn’t what it used to be. Just a year ago, I was weeks away from completing the purchase of my dream house. My partner and I could afford it and yet, we ended up backing out. Our fears and the stability of the housing market simply became too much. And we’re not alone – our Quarterly Consumer Report found a quarter (26%) of people with mortgages fear having their home repossessed.

I’m one of the millions of people who live in the South East, and I’ve spent the last nine years scrimping and saving to pull together my half of a 10% deposit on a property. According to Zoopla, the average house price in my area of Kent is £232,814 – and even though we’re hoping to spend less than this – we’ve got a challenge ahead!

First home financial phobia

I have to confess – I’m terrified about buying my first house. I’ll be giving away every penny I have to take out a very expensive, very long-term loan on a property that I can only hope will increase in value.

But if the value falls, we could join the numerous mortgage prisoners scattered across the country. In October this year, Which? called on the Chancellor to put tougher obligations on banks that get cheap finance through the government’s Funding for Lending Scheme and ensure that mortgage prisoners and first time buyers benefit from lower borrowing costs.

I have my first house viewings lined up this weekend, but part of me hopes I don’t fall in love just yet. Are you looking to buy a house in the near future? Or has pessimism prevented you from taking the plunge?

Comments
Member

The interest rate on loans made on homes reflects the risk the lender takes if the borrower defaults – will they get their loan back if they need a forced sale. So the bigger the deposit, the lower the risk – and very low interest rates are availalble. So are loans with smaller deposits – but at higher rates. So you can buy, and generally it is better than renting and, probably, no more expensive.

The main issue is – to afford what you buy. Hopefully for now the days are gone when a house was regarded as a cast-iron inflation-beating investment, with silly loans to support spiralling prices. Common sense evaporated.

We will always have a shortage of homes, but ,with sensible lending, prices should stay fairly stable for the forseeable future, giving the time to save a deposit without prices rising out of reach.

As land cost is such a significant element in the price of housing, and granting planning permission makes land so valuable, perhaps councils (no doubt funded by government just as they release loan money to banks) could play some part in controlling costs. Suppose for starter homes the council bought the land at a controlled price as a condition of granting planning, and leased it to the end purchaser – as ground rent? The builders sale price and profit would be in the building only. Could this reduce initial costs?