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| TUESDAY 29TH MARCH 2005 |
 FIRST
TIME BUYERS RE-LOSE CONFIDENCE
First-time buyers are suffering a crisis of confidence about
securing their first property. Abbey’s latest quarterly
first-time buyer's report reveals that, in the space of just
three months, the number of people who are confident about
being able to buy first home this year has dropped dramatically
from 18 per cent to just 5 per cent.
Thirty seven per cent of first-time buyers say there are
not enough properties on the market in their price range,
but 29 per cent are simply waiting for prices to come down.
This latter figure has dropped from 42 per cent in the last
quarter, probably as a result of recent reports of moderate
increases in house prices.
Stamp duty has clearly been a barrier for first-time buyers
and the Chancellor's recent decision to raise the zero rate
threshold £120,000 may result in an improvement in
first-time buyers' confidence over the next quarter, particularly
in lower-priced areas of the country.
However, in what is now considered a buyers’ market,
first-time buyers are less afraid offering a lower amount
than the asking price. Just under half (45 per cent) think
the time is right to do this, and of these people, more than
three quarters (77 per cent) would negotiate a price at the
outset and15 per cent would submit a lower offer during the
house buying process.
Not all first-time buyers, however, would consider putting
in an offer less than the asking price. Forty three per cent
would be concerned they'd lose the property and an upstanding
12 per cent think it's just not right and they would feel
bad about it. One in ten (10 per cent) weren't even aware
they could put in a lower offer than the asking price.
Keen to maximise their value for money, many first-time
buyers would also ask for the following to be included in
the price: lights (59 per cent); curtains/blinds (54 per
cent); cooker (50 per cent); dishwasher (35 per cent); washing
machine (34 per cent); fridge freezer (33 per cent).
Property prices have risen to such a high level that many
first-time buyers simply cannot afford to buy on their own.
According to Abbey’s figures, 21 per cent would consider
buying through a housing association and a quarter would
club together and buy with a family member or friends. Just
under a quarter (23 per cent) would also consider buying
a wreck in the hope that it will provide a cheaper way of
securing a property. Foregoing bricks and mortar in favour
of a houseboat or caravan appeals to five per cent.
The price first-time buyers are prepared to pay for their
first home:
* Up to £100,000 18%
* £100,000 - £125,000 17%
* £126,000 - £150,000 15%
* £151,000 - £175,000 11%
* £176,000 - £200,000 9%
* £200,000 - £250,000 7%
* Over £250,000 14%
When it comes to a deposit for the property, more than half
of first-time buyers (54 per cent) will save up for the deposit
themselves, three per cent will get a helping hand from family
but eight per cent intend to forego the deposit altogether
and get a 100 per cent mortgage.
And with stamp duty no longer a consideration for many more
buyers, any money that had already been set aside for this
could fund a larger deposit and that could ultimately open
up access to more competitive mortgage deals.
Of the first-time buyers who are raising a deposit, a quarter
(25 per cent) aim to have at least a 10 per cent deposit
and twenty eight per cent aim to have more than a 20 per
cent deposit.
Compared with Abbey's first-time buyers report in January
2005, the amount buyers are prepared to spend on their first
property has increased, with 14 per cent prepared to pay
over £250,000 compared with 3 per cent in January.
The amount of people hoping to have a deposit of 20% or more
has also increased from 12 per cent in January to 28 per
cent.
Barry Naisbitt, Abbey's Chief Economist, said: "In
the lead-up to the most popular season for house buying,
it's worrying that there has been such a drop in confidence."
"Our report shows just how tough it is to get on to
the property ladder, but we hope that the recent increase
in the stamp duty threshold will have a positive effect on
first-time buyers’ confidence and affordability over
the next quarter."
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