New research from conveyancing service provider, My Home Move, has revealed that the number of first-time buyers and buyers of investment properties has fallen in the last two years.
First-time buyers accounted for 7% of clients using a Gifted Deposits (June 2016-July 2017), a decrease of 4.5% compared to the same period in 2014/2015. Similarly, Gifted Deposits used by investors fell by 2.5%, accounting for 4.1% of all transactions.
Doug Crawford, CEO of My Home Move, comments: “What is particularly interesting is the drop in Gifted Deposits to first-time buyers. We know that affordability is a key issue for first-time buyers, particularly as 55% of them are looking to buy properties costing less than £150,000, which gives them roughly a 1% chance of finding a suitable property. With gifts to this group falling steadily, it does beg the questions as to whether this is reflective of a drop in the number of first-time buyers entering the market, or whether there are other factors in play.”
In comparison, overall use of Gifted Deposits decreased by just 4% in the same time period, indicating that those already on the housing ladder are in need of additional funding to purchase their next property. 88.9% of all those purchasing using a Gifted Deposit were second-steppers or middle-movers, an increase of 8.7% between 2014 and 2017.
Doug continued: “We already knew that the main beneficiaries of Gifted Deposits were people that were already on the property ladder, but the data seems to suggest that these second-steppers and middle-movers are in more and more need of help to make it onto the next step. As house prices have risen by almost 18% in the timeframe that was analysed, it may be that people are struggling to accumulate enough equity from the home that they are in now to raise a deposit on their new property. The average property deposit is now close to £60,000, so it’s likely that the Bank of Mum and Dad are stumping up the additional funds needed to help their children into bigger properties.
Although the use of Gifted Deposits seems to have stabilised following the spike in transactions we saw around the time the SDLT changes came into force last year, Gifted Deposits still account for around 8% of all property transactions, suggesting that over 100,000 people still need help from parents or grandparents to obtain their dream property. It is clear that affordability is becoming a concern not just for first-time buyers, but for people on all steps of the property ladder. For now, it seems the Bank of Mum and Dad is still open for business, but with increasing house prices and stagnating wages, it’s unclear how much longer it will be open for.”
Content taken from the latest news at Property Reporter.co.uk