First time buyers put plans on the back burner

Fears over house prices and the state of the economy have convinced almost two-thirds of first time buyers (FTBs) to delay their first step on the property ladder according to new research from Abbey Mortgages.

At the start of 2008, 14 per cent of non-homeowners were considering investing in their first property but now just 36 per cent of this group are planning to proceed with their purchase – 64 per cent of first time buyers have put their property search on hold.

The research found that 74 per cent of all FTBs claim that speculation about house prices and economic uncertainty has dampened their enthusiasm. Of these, 69 per cent fear that house prices will fall, whilst 67 per cent feel that their finances are already too stretched. Others are worried they might lose their job.

According to Abbey, FTBs in Wales and the South West have been affected the most of any part of the country. In these areas 15 per cent were planning to buy their first property at the start of 2008 but a massive 87 per cent of this group have now decided to delay.

Nici Audhlam-Gardiner, Director of Mortgages at Abbey, commented: “We know how difficult it is for first time buyers to get on the property ladder, and this is exacerbated by current market uncertainty.

“As has always been the case, we recommend that homebuyers give serious thought to affordability when purchasing a home and not overstretch themselves. However, we still have excellent offers for those first time buyers, for whom going ahead with a house purchase makes good sense.”

Abbey provides mortgage advice for first time buyers and special mortgage deals for those entering the property market, including great rates, lower deposit requirements, free valuations and cashback towards legal costs.

Young FTBs were most likely to be delaying entering the property market. Of the under 25s 11 per cent were considering buying their first home at the beginning of the year but now just two per cent will be going ahead with this purchase – equivalent to 18 per cent of the original FTB group.

In the 25 to 34 years age group, the most active FTB group, 21 per cent of non-homeowners were considering purchasing their first property however this number has fallen away by 58 per cent with just nine per cent now intending to purchase a home over the next 12 months.

This age group was most likely to say that economic uncertainty has affected their decision – 82 per cent say this has had an impact on their purchasing decision.

For more information, visit abbey.com.