Traditionally, first-time buyers are aged between 25 and 36 – but research by HSBC reveals that this current generation is divided into two sections – the ‘property haves’ and the ‘property have-nots’.
The report, which looks into the longer-term consequences of the current housing shortage, suggests the impact will be felt by subsequent generations. Although younger people getting onto the property ladder typically do so at 29, others – the ‘have-nots’ – may be 35 or older before they can afford to buy their first home.
First Time Buyers: The New Property Path indicates that those who buy their first home in their late 20s are likely to move up the property ladder and buy a family-sized home by the time they reach their mid-30s. For those without a foothold on the property ladder until their mid-30s, it’s likely they will be at least 42 before they move into a home large enough for a family.
The findings are based on responses from more than 1,000 people in the 25-36 age group.
Buying their first home in their late 20s rather than mid-30s could have a beneficial impact on property homeowners throughout their lives. This includes being in a better position to offer financial support to their own children when the time arrives for them to consider buying a home.
As far as paying off their mortgage is concerned, current property owners between 25 and 36 are likely to have completed their repayments by the time they are 60 or just after. Those who leave it longer to buy their first home are likely to be almost 70 before they clear their mortgage.
“Despite the planned increases to the state pension age, the average age people in the UK expect to retire is 65,” says the report. “This raises the issue of delayed retirement as well as them being unlikely to be in a position to gift their children money for property purchases.”
Traditionally, parents of those currently in the 25-36 age group, bought their first property at 28, moved into a larger, family home within three or four years and paid off their mortgage by their mid-50s.
This provided a ‘golden age of inheritance’ with first-time buyers benefiting from their parents’ property wealth. Many young people currently use money from the ‘Bank of Mum and Dad’ to pay for a first-home deposit.
Many of the so-called property ‘have-nots’ have to wait much longer to buy their first home because they are unable to raise a deposit or turn to parents for financial assistance.
Delaying taking a first step onto the property ladder could also impact on the number of children people have and when they have them, the report finds.
Recent surveys have suggested that more and more people are buying their first properties – buoyed by low interest rates and the availability of mortgages and competitive terms. However, the latest figures indicate that over 3.3 million people aged between 20 and 34 in the UK still live with their parents.
HSBC head of mortgages Pete Dockar commented: “Home ownership continues to be an aspiration for the majority of young people.
“This study shows postponing their purchase has long-term implications not just for their future property ownership, but their ability to help their own children step onto the ladder.”