New generation of Scots first-time buyers aged 40
THE average Scot does not expect to be able to buy their first home until they are 40, five years older than househunters across the UK as a whole, according to a new study.
Economists say restrictions on mortgage lending, the high price of homes relative to income and the burden of paying off student loans mean it will take almost half of first-time buyers ten years or more to save up the deposit to buy their own homes.
While their counterparts in the West Midlands expect to buy their first home at just 29 and those in London at 33, Scots come bottom of the table for belief in when they will get on the property ladder. They reckon they will not be able to buy their first home until 40, the highest age in the United Kingdom, along with the north-east of England.
The age of first-time buyers has been rising steadily since the early 1960s, when people purchasing their first home were on average 24 years old. Across the UK, almost a third of people (32 per cent) questioned said finding a deposit was the biggest obstacle – with most saying they did not expect to be able to save enough unless they got a better job or inherited money.
Almost one in five (18 per cent) said they did not believe they would be able to afford mortgage payments. Nearly a third (29 per cent) would be encouraged to buy a home if they were offered more government assistance, and almost a fifth (19 per cent) said a reintroduction of zero stamp duty for first-time buyers would help them to get a foot on the property ladder.
But hitting important milestones in life, such as getting married (12 per cent) or starting a family (12 per cent), are triggers for non-homeowners to buy their first property.
John Willcock, head of Post Office mortgages, which carried out the survey, said: “The average age of a first-time buyer has been creeping up over the past 50 years and a perceived ten-year wait to raise a deposit doesn’t help matters. The sheer size of the deposit is the most daunting thing for would-be first-time buyers, but it appears to be worth the wait if it works out cheaper than renting.
“However, there are a number of competitive mortgage options for people keen to buy their own home, and prospective buyers may not have to wait until they’re 35 to get a foot on the ladder.”
Robin Purdie, director of independent mortgage brokers Mov8, said he was not surprised to hear the age of first-time buyers was hitting a peak.
“First-time buyers now have to raise a minimum ten per cent deposit and have a squeaky-clean credit history. At one time, 125 per cent mortgages were available – but that is no longer the case.
“We are seeing a lot of first-time buyers who can only get on to the housing ladder with a step-up from mum and dad.”
Martin Ellis, housing economist for the Bank of Scotland, said: “House prices are still high in relation to earnings and people are having to put down higher deposits. There are no longer 100 per cent loans.
“There may also be a change since the 1960s because people are entering the labour market later. And these days people are coming out of university with significant levels of debt.”
Neil Harrison, of ESPC, said repaying student loans was one reason the younger generation was taking longer to raise the deposit on a property.
He said. “Graduates looking at the property marketing have to take account of repaying student debts which, based on the 2012 UK Graduate Careers Survey, ranged from £10,000-£15,000 for Edinburgh, Glasgow, Strathclyde and St Andrews.”
The Scottish Government has just announced a new phase of its shared-equity scheme and is expected to make a major announcement about support for mortgage lending tomorrow.
A spokesperson said: “The Scottish Government is committed to doing all it can to help people on low to moderate incomes across Scotland get on the property ladder.”
“Despite the savage cuts to our capital investment budget by the UK Treasury, the Scottish Government has continued to fund its Low Cost Initiative for First Time Buyer (LIFT) schemes and is doing all it can to stimulate growth in the economy.
“Last week, we doubled the budget for our Open Market Shared Equity Scheme from over £10m to over £20m and we have allocated £2.5m to a further funding round of the New Supply Shared Equity with Developers Scheme which is helping to support Scotland’s house-building industry and sustain construction jobs. In total, this financial year we have allocated £23m to our LIFT shared equity schemes.”
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Sunday 19 May 2013
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