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| TUESDAY 28TH JUNE 2005 |
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CHANGE FROM STAMP DUTY INCREASES
Despite the recent increase in the zero rate stamp duty threshold,
confidence among first-time buyers is not improving, according
to the mortgage lender, Abbey today.
Its latest quarterly first-time buyers’ report reveals
that, in the space of the last three months, the number of
people who are confident about being able to buy their first
home in the next year has remained at just 5%. And a quarter
(25%) feel that if they don’t get on to the property
ladder soon, they’ll never be able to do it.
According to Abbey’s research, however, prospective
homebuyers see shared ownership and shared mortgages with
friends or family as potential solutions. Its figures reveal
that one in three (29%) would consider buying a shared ownership
property through a housing association as way of getting
on to the property ladder, and 31% would contemplate buying
with family or friends.
A quarter (27%) would think about buying a wreck in the
hope that it will provide a cheaper way of securing a property,
an adventurous one in five (21%) would even consider building
their own home and 18% would consider buying abroad.
Barry Naisbitt, Abbey’s Chief Economist, said, "Given
the recent changes to stamp duty, it’s disappointing
that confidence amongst first-time buyers has shown no improvement.
However, on a more encouraging note, our research also shows
that they are willing to take a flexible approach to their
housing finance and that, if the Bank of England did cut
interest rates, this would give them a boost."
Economic outlook
A quarter (26%) of first-time buyers believe that house
prices will come down and so are waiting for a better deal
before they buy, and 13% believe that interest rates will
drop this year. If, as many now think possible, rates do
decrease this year, 15% of first-time buyers say that they
would be more likely to buy a property. If rates increase,
a fifth (21%) say they’d be less likely to buy.
The realities of sharing a mortgage
First-time buyers have a realistic view of the pitfalls
of sharing and those who would consider it realise that they
need to take steps to ensure that a mortgage sharing arrangement
works. Abbey figures reveal that three quarters (76%) of
first-time buyers would draw up a legal agreement to record
who owns what and half (47%) would have a contingency plan
should one of the sharers want to move out and sell their
portion.
They also obviously think that two’s company but three’s
a crowd. More than three quarters of first-time buyers (76%)
would consider sharing their mortgage with one other person
but only 11% would consider sharing with two or more people.
There are, of course, some who wouldn’t consider sharing
a mortgage, and Abbey’s research highlights a number
of reasons why this is the case:
* 85% prefer to be financially independent
* 30% have concerns about what would happen if someone wanted to move out
* 28% think that there would be too many disagreements over what property to
buy and where
* 24% have concerns about making sure that everyone pays their share of the
bills
Getting a deposit
When it comes to saving a deposit, the task facing first-time
buyers has become much harder in the past five years with
the rapid increase in house prices. According to the Council
of Mortgage Lenders, the average deposit put down by first-time
buyers is currently around £16,000 compared with approximately £5,500
in 2000.
Almost a quarter (23%) of prospective first-time buyers
surveyed by Abbey say that they intend to raise more than £13,000
as a deposit, 6% hope to raise between £10,000 and £13,000,
14% hope to have between £7,000 and £10,000,
and 21% say that they would aim to have between £4,000
and £7,000. 21% intend to raise between £1,000
and £4,000 and 7% think they’ll have nothing
at all.
Most prospective buyers (68%) say that they will save up
for the deposit themselves and a further 24% say that they
hope to get some or all of it from family. 6% intend to forego
the deposit altogether and get a 100% mortgage, and a further
6% are relying on an inheritance as a way of securing the
cash.
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