A degree, a partner and generous relatives are becoming prerequisites for anyone who wants to clamber on to the housing ladder, according to research carried out for the Guardian.
The research, by property website Rightmove, offers a snapshot of how difficult life is for first-time buyers, who have been hit by house prices that have risen faster than earnings and tightened lending criteria after the credit crunch. Although 53% of first-time buyers across the UK said they would be financing their purchase alone, one in four said they would get financial help with a deposit and other buying costs from their parents.
The proportion receiving help varied from 49% in London and south-west England to 58% in East Anglia. A third of those getting help with their deposit said at least 50% of their funds were coming from their parents or another family member.
The survey, of more than 5,000 people hoping to buy their first home in 2012, found 38% were educated to degree level, while 30% had postgraduate qualifications. Among those aged between 25 and 34 – the age range that accounted for the biggest number of respondents – 41% were graduates and 35% postgraduates. Figures from the Office for National Statistics show that across the population as a whole, 37% of 25- to 34-year-olds hold a degree or higher degree.
David Hollingworth, of mortgage brokers London & Country, said this figure probably reflects the income buyers need to meet the affordability test and the fact that prices have not come down in many areas, particularly in south-east England.
While a bachelor’s degree is now commonplace, the bachelor pad may be a thing of the past, with 63% of respondents saying they were buying with a partner. Fewer than a third (32%) were attempting to buy alone, while the others were buying with friends or family.
Justin Andrew, one of the first-time buyers who responded to the survey, is about to move into a one-bedroom newbuild flat in Greenwich, south-east London.
Andrew, who has a postgraduate qualification and works as a graphic designer, and his partner, Graham Holland, had been struggling to save while paying rent, but were offered help when Andrew’s mother finished work.
“My mother, who worked as an air traffic controller for 30 years, volunteered to use part of her redundancy money to finance a deposit for us,” he said. Her money will buy a share of the property, with the couple paying rent on that share, and she will get a percentage share when they eventually sell up.
“By living somewhere we liked, we couldn’t ever contemplate saving the 15% deposit required to secure a property. Without my mother’s help, we’d never have got on that first rung of the ladder,” he said.
HSBC, which provides one in seven first-time buyer mortgages in the UK, said the figures for those getting parental help were similar to the levels it had seen this year. Although much has been made of high prices in the south-east, which have barely dropped since the market peaked in 2007, stagnating incomes and the disappearance of high loan to value mortgages mean this is not just a London story. Nor does it just involve parents.
Ian Bythell, head of Lancashire estate agency chain Petty’s, said: “First-time buyers are often relying on grandad and grandma – it’s amazing how often grandparents are coming into the office with them.”
Buyers were typically targeting properties costing about £110,000, but local salaries made it hard to save enough. “Grandparents are probably sitting with a large chunk of money in the bank which is earning no interest and are thinking that they might as well help their grandchildren.”
First-time buyers are still saving to put together deposits, with two-thirds of those questioned saying they had been putting by money for at least three years. One in five said they had been saving for five to six years, 15% had been saving for seven to 10 years and 6% for more than 10 years.
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