Job Insecurity Now The Biggest Barrier To Home Ownership

Figures from the Building Societies Association (BSA) have revealed that for the first time in a decade, the largest barrier to home ownership is job insecurity.

For the last ten years, people wishing to buy a home have found the biggest barrier to be raising the deposit. Whilst many first time buyers are able to afford the monthly costs of owning a property, and are often paying more due to the cost of renting. It is for this reason they cannot afford to save for a deposit.

Prior to the financial crash in 2007, first time buyers were able to get up to 100% mortgages so long as they met the criteria set down by lender. From personal experience, this was generally quite easy to fulfil, with only a phone call to an employer asking whether you were actually in employment!

However, the crash changed all this, with lenders requiring deposits and charging more interest to those with smaller deposits. This meant those with a small deposit were penalised and in turn were more likely to wait until they were able to afford a larger deposit.

Since the coronavirus however, 65% of buyers have now stated that job insecurity is the biggest barrier to owning their own home, a rise of 30% since March.

It was also found that 45% of those questioned felt that house prices would fall in the next 12 months, meaning many may hold off purchasing their first home as it will reduce their equity further.

There was some positivity within the market however, with 57% of homebuyers and 52% of sellers stating that they either have not left the market or will be returning to the market. This is good news for the third of buyers who have resumed their property buying process compared to the 11% who have decided to put off their search for a property for the next two years.

Nearly a third of sellers will be putting their property back on the market within a month, or have left it on the market during lockdown, which again show positivity, especially against the 5% of sellers who have decided not to market their property.

Paul Broadhead, head of mortgages and housing at the BSA, commented:

“It is unsurprising that confidence in the housing market has waned in the current climate. Covid-19 has impacted every facet of our lives, and the housing market is not immune.

“That said, we are only just getting past the peak of the crisis, and there are already some very positive moves being made both by Government and by lenders to get the housing market moving again. These measures include implementing virtual valuations, extending mortgage offers and safely resuming property viewings – which these figures highlight as a key concern among consumers.

“These results mark the first time that ‘raising a deposit’ hasn’t been the biggest barrier to home ownership in a decade. Many households have increased their cash savings during lockdown. If they grow more secure about their job prospects, this may enable buyers to put a little more towards a deposit, and if prices do moderate somewhat, it could help with affordability issues – especially for first-time buyers. Once the market settles back into some form of normality and confidence in job security rebuilds, we could see a fresh landscape that appeals to aspiring homeowners.

“The market must keep moving. New build production will be considerably reduced with streamlined workforces returning to sites following a period of inactivity. If people also delay selling their existing properties, another flow of housing stock will be effectively blocked. However, it is good to see some intent to return to the market from consumers. Our sector will continue to support buyers and sellers in adapting to the new housing market norms and keep the market fluid.”


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