How the high cost of living is affecting potential first time buyers
The rise in the cost of living has affected many who are looking to buy their first home, according to a recent poll by major mortgage lender Nationwide.
Overall 84% of the 1,000 people who were questioned in the study, said that that the rising prices had knocked back their ability to finally step onto the property ladder.
Just under half of those respondents said that they are pushing back their ambitions to buy a property, due to worries about whether they can afford to buy.
While 60% said they had made the decision to delay purchasing a home from anytime between three and five years.
A fifth of those who were asked in the survey, said that they do now not think that they would be able to buy that first home until they reached their forties.
The two most difficult hurdles to overcome for first time buyers were saving enough for a deposit for a place, or they did not believe that they would be accepted by lenders as they thought they would fall short of any affordability assessments.
The poll found that 52% of those asked said that the spiralling prices had made it far more difficult to put money aside.
Inflation continuing to fall say retail group
Yet the cycle of high prices is easing, as the British Retail Consortium (BRC) found that shop price inflation in the year to April was 0.8%, which cooled from the 1.3% annual shop price hike that was found in March.
Food price increases have been an issue for some time, but food prices decelerated to 3.4% in April, which was 0.3% less compared to the annual figure for March.
This was also below the average for food price inflation over the past three months. which has been 3.9%.
Non-food prices fell into a deflation figure of -0.6% in April, with clothing and footwear prices especially falling as retailers offered many discount prices.
The BRC’s findings support the official data that inflation in the UK is falling, as the Office of National Statistics’ figures showed that annual inflation in March fell to 3.2% in March, a far cry from 10.1% of a year ago.
The Bank of England has maintained interest rates for five successive times at 5.25%, but has forecast that inflation will drop below its 2% target in the spring.
This might allow the Bank of England to start to reduce rates, as many analysts expect during the second half of this year.
Although its still a little unpredictable when exactly this might happen.
The next interest rate decision will be made on May 9.
House forecasts for the year ahead
House prices are widely forecast to fall this year due to the continued uncertainty for consumers, alongside a squeeze on available cash according to Lloyds Bank.
Its anticipates a drop in house prices between 2% and 4%.
While the Centre for Economics and Business Research forecast that house prices will decline by an average 1.9% throughout this year.
This follows a 2.1% fall in housing prices it found in its annual figures for November last year.
Property blog Rightmove also believe that there will be a smaller rather than major fall in prices for this year, with a drop of 1% as competition increases for sellers to find a buyer.
While this is good news for prospective buyers, at the same time the decline in prices is part of the same current financial climate making it increasingly harder to save.
Yet Halifax said in its latest figures that house prices actually increased in the year to February by 1.9% or a £5,318.
This was mainly down to the demand to buy smaller homes.
And for next year….
Next year should see house prices in the UK finally recover on a consistent basis reversing the recent trend of prices falling steadily, rather than decreasing by a huge margin as some analysts were predicting at the beginning of last year.
Lloyds, who own Halifax and is Britain’s largest mortgage lender, said that next year house prices would begin to rise by an overall 2.3%.
Its chief financial officer William Chalmers, said that there has been an increase generally in the housing market for a number of years, and so we will see a retracing of a part of those steps next year.
Santander have also previously forecast a house price rise of 2% for 2025.
First time buyers will be hoping that the environment to save improves, to allow them to match those potential property increases.