When it comes to impressions of the housing market a report from the Halifax has found a wide disconnect between prospective first-time buyers and their parents. While just 12 per cent of parents believe it is ‘virtually impossible for first-time buyers to obtain a mortgage’ this rises to 21 per cent of prospective first-time buyers.
The Generation Rent Report contains data from interviews with over 40,000 20-45 year olds built up over five years, and over 4,000 parents of 20-45 year olds over the last four years. In recent years, it has shown parents and Generation Renters were both more pessimistic about the first-time buyer market (with 21 per cent of parents and 29 per cent of prospective first-time buyers saying it was virtually impossible three years ago in 2012).
However, with improving economic conditions and an increasing number of first-time buyers since then, both parents and prospective first-time buyers have become more optimistic – although more than a fifth of Generation Renters still believe it’s virtually impossible.
Despite increased optimism from parents The Generation Rent Report also found that first-time buyers moving back in with Mum and Dad is a growing issue, and in 2015 28 per cent of parents said their children moved back to their family home, compared to 24 per cent in 2012.
Looking at how parents have supported their children in buying their first home, it becomes apparent that direct parental contributions towards the costs of a mortgage have remained steady.
While a contribution towards a deposit has remained the single largest type of contribution the numbers have remained steady. The only increase in the last four years has been those helping with the actual costs of moving house.
Almost 60 per cent of parents who own a property said they had contributed or were planning to contribute towards their child’s deposit. This compared with 24 per cent of parents who rent. Furthermore, 24 per cent of parents who own said that they were, or plan to be a guarantor on a mortgage compared with just seven per cent of parents who rent.
As parental help is evidently more important for the people who want to get on the property ladder, it is interesting to note that parents who own their own home are more likely to help their children than those who rent. This clearly emphasises the importance of property ownership for the prosperity of future generations.
Craig McKinlay, mortgage director at the Halifax, said: “The Generation Rent Report shows a clear divide between parents and their children as regards optimism over getting on the housing ladder. In reality there are more mortgages available which require a 5 per cent deposit and first-time buyer numbers are increasing. But whether it is giving their children a cash lump sum or providing a roof over their heads while they save, it is clear the bank of mum and dad will have a role to play in helping their children get on the property ladder for the foreseeable future.”
There is a lot of help available to first time buyers in the Eastern region from developers such as Larkfleet Homes. The firm has a range of affordable properties in most of its developments in the region that are targeted to first time buyers. They also offer properties via schemes such as Help to Buy so it is worth going along to visit a show home or contacting Larkfleet via its website for more details.