Housing ties with healthcare as the biggest election concern for tenants

  • For tenants, housing and healthcare will be the issues most likely to affect their vote in the 2015 General Election
  • Seven in ten prospective buyers cited the inability to build a deposit as one of the biggest blocks to homeownership
  • December sees 24,800 first-time buyer transactions, 8% lower than a year ago as demand slows

Housing and healthcare are the two biggest concerns for both tenants and first-time buyers in the run-up to the General Election in May, according to the latest First Time Buyer Opinion Barometer from Your Move and Reeds Rains.

For tenants, housing is just as likely as healthcare to affect how they will choose to vote. One in six tenants (16%) revealed that housing was the issue that would be most likely to affect their vote at the General Election, while a further 16% cited healthcare as their primary concern. The jobs market was the third most-quoted option, selected by 11% of tenants, followed by education (6%) and infrastructure/transport (1%).

Housing also proved a primary concern for a large proportion of first-time buyers (17%), although it was not their biggest concern – 23% of first-time buyers reported that healthcare was the issue that would be most likely to affect their vote.

Despite this, the vast majority of prospective first-time buyers (78%) reported that the upcoming General Election has had no influence on their decision to actually buy a home at this point.

Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “Of all the troubles facing tenants, the struggle to get onto the housing ladder is their biggest concern – and it is most likely to affect how they may choose to vote in May. We are in the grips of a housing crisis, with our population increasing at a faster rate than we are building new homes. And while wages have experienced a marked uplift over the last few months, the affordable housing conundrum is far from solved. Even economic heavyweight Mark Carney has complained that housebuilding is too low.

“In order to put a dent in this housing crisis we need to make some tangible changes in how we control construction. We should ease planning regulations to get rid of the layers of bureaucracy slowing the process, and we need to make it easier to regenerate brownfield sites. On top of that, we should support smaller construction firms hampered by the credit crunch, and encourage skilled construction workers to stay in the field. This is about making it quicker and easier to build, and making sure we have all the resources at the ready.”

First-time buyer demand slows

Slowing first-time buyer demand has pushed the number of first-time buyer completions down. There were 24,800 first-time buyer completions in December 2014, 4.2% fewer than in November and 7.8% fewer than 26,900 a year ago. However, 2014 as a whole still saw substantially more first-time buyer sales than 2013, with 311,300 first-time buyer completions in 2014 – 15% more than 270,500 in 2013.

The average first-time buyer purchase price has risen 3.0% year-on-year, reaching £155,413 in December. First-time buyer deposits have also risen – but at a much slower pace – as Help to Buy has allowed more higher LTV borrowers access to finance. The latest Mortgage Monitor from e.surv showed that lending to higher LTV borrowers increased 5% month-on-month in December.

The average first-time buyer deposit was £27,384 in December 2014, up from £26,961 in December 2013, with recent stamp duty savings helping first-timers to put together larger deposits. First-time buyers paying the average purchase price (£155,413) would have been liable for stamp duty fees of around £1,550 before the graduated system was implemented, but this would now have been reduced to £600 – meaning savings averaging £950 which have boosted their deposit capacity.

Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “On paper, now is a fantastic time to get onto the housing ladder. Mortgage rates are at record lows, pushed downwards by falling inflation and rising certainty that an interest rate rise will be put off until the tail end of the year – if then. At the same time, wages are healthier, and first-timers are seeing their finances recover from the plague of the recession. On top of this, the government has extended an additional helping hand to first-timers with the revision of stamp duty, which will particularly benefit those buying in the capital. And the Help to Buy scheme remains in place, providing a shortcut to saving for a large deposit, meaning first-timers can lock into the property market before prices climb further.

“But despite this combination of favourable conditions, the number of first-time buyers has fallen back. Mortgages are more accessible than ever, but fewer buyers are taking advantage of the finance on offer. Misunderstanding over new regulation, global economic uncertainty and a lack of cheap homes are stymieing the recovery in first-time buyer numbers, causing a temporary dip in December.”

Blocks to homeownership

Your Move and Reeds Rains asked tenants what was preventing them from getting on the housing ladder, and discovered that the challenge of putting together a deposit was the biggest block to homeownership.

Seven in ten (68%) prospective buyers cited the inability to put together a cash deposit as one of the reasons preventing them from getting onto the housing ladder in December, while the second most popular reason was having insufficient income to support mortgage repayments (25%).

One in five (18%) prospective buyers named concerns over expensive transaction costs, including stamp duty and legal fees as one of the barriers to buying, and 11% worried that interest rate rises may push up their mortgage repayments. Worries about decreasing income (7%), unemployment (6%) and falling house prices (6%) also concerned a significant portion of prospective buyers. Finally, 6% of prospective buyers said they were waiting to see what would happen at the General Election in May.

Financial help for first-time buyers

Under half (43%) of first-time buyers said they were able to self-finance their purchase in December. A third (34%) reported that relatives helped them to put together a deposit, compared to 37% in December 2013. Use of the Help to Buy Scheme helped fill this gap – in total, 9% had made use of Help to Buy in December 2014, with 4% taking advantage of the equity loan scheme and 5% using the mortgage guarantee scheme. This compares to just 3% reporting they had used either aspect of Help to Buy twelve months before.

A further 9% of first-timers revealed they had benefited from an inheritance. And 4% reported that relatives were going to help them with mortgage repayments.

Adrian Gill, director of estate agents Your Move and Reeds Rains, explains: “Help to Buy is filling a vital gap – helping those who can’t afford to put together a large deposit to get onto the housing ladder regardless. This is all the more important as the Bank of Mum and Dad is starting to dry up – the proportion of first-time buyers receiving help from their parents has fallen compared to last year. And, crucially, Help to Buy is allowing those in areas of the country still waking up from the coma of the crisis to get onto the housing ladder – areas which are now only just beginning to feel the energy emanating from the economic recovery.”

Stamp Duty

A third of prospective first-time buyers said that the recent changes to stamp duty would make them more likely to buy, with 15% reporting that they are ‘much more likely to buy’ as a result of the changes and 17% saying they are ‘slightly more likely to buy’. However, the changes have had no effect on the majority of buyers, with 59% revealing the overhaul would have no impact on their decision.

Adrian Gill, director of estate agents Your Move and Reeds Rains, continues: “The stamp duty shake-up means that buyers looking to purchase property sitting just above one of the old thresholds stand to save a bundle on upfront costs. But for first-time buyers, the reforms will only touch certain regions of the country. In some areas, the typical first-time buyer property is priced far below the lower stamp duty threshold, and so the changes will have no direct impact on many local first-timers. However, the overhaul will still invigorate these areas, adding an extra incentive for home-movers further up the chain to trade-up, encouraging more activity in the market.”

Regional differences

The average first-time buyer in London and the South East was 33 years old and earning £47,300, but in the rest of the UK, the average first-time buyer was 31 years old and earning £32,100.

The average purchase price for first-time buyers in the capital climbed above £300,000 for the first-time on record in Q4 2014 – compared to an average of £151,692 across the UK. At the same time, the average deposit size for buyers in the capital climbed to £74,133, also a new record.

Similarly, purchase prices in the South East crossed the £200,000 threshold in Q4, as the average purchase price rose to £202,933. Despite these climbing prices, there were 16,800 first-time buyers in the South East over the quarter.

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