79% Of First-Time Buyers Have Too High Expectations

79% Of First-Time Buyers Have Too High Expectations
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According to the Yorkshire Building Society, first-time buyers need to manage their expectations when it comes to what they can afford, with more than half having too high expectations.

For their Housing Britain Report, the building society has surveyed 1,750 homebuyers at all stages about their views. And the results show that the majority of first-time buyers have too high expectations, with 79% believing that their first home will meet all their needs.

And two in five first-time buyers believe that their first home will also be their last home. The building society said that first-time buyers need to be prepared to make compromises in order to find a home sooner.

Those looking to buy a home for the first time who are prepared to compromise, should be able to get on the housing ladder sooner, but should be aware of the sacrifices those compromises will bring.  

Jeremy Duncombe, Director of Mortgages Distribution at Yorkshire Building Society

High Prices Mean Many Homebuyers Have Too High Expectations

The Housing Britain Report shows that 75% of homebuyers believe that buying a home is no longer affordable for many people. This feeling is supported by the fact that house prices have risen by 200% in the past 20 years.

The cost-of-living crisis and rising interest rates have led 60% of people to worry about the housing market and what impact it will have on their family’s life in the next few years.

The financial pressures combined with high property prices mean that people will have to make compromises when buying their next home.

With 59% of homeowners saying that their current house meets none or only some of their needs, the search for a new home can become difficult.

The main reasons for people to be dissatisfied with their current home are not having enough outside space (39%) and the current property being too small (38%).

But to find a home that will solve these issues, the next house will have a bigger price tag. Which could prove a tricky house search if the budget does not match the wish list.

First-time buyers’ main reason to want to buy a house is to get onto the property ladder, which 27% of respondents named. Followed by the feeling that they are wasting money on renting, which 18% have identified as reason.

And although many people have the desire to buy a house that meets their needs, they face many barriers. The biggest barrier, with 27%, is the cost of moving. This includes moving fees, legal fees and mortgage fees.

The same number of people cited the cost of living as a barrier to them buying their next or first home. With 24% of people saying the cost of property in their preferred area is too high for them.

Renters Also Have To Manage Their Expectations

People looking to rent will also get disappointed if they have too high expectations. Because rents have risen sharply between July 2020 and July 2022, many tenants will have to accept less now than they did two years ago.

According to data from Hamptons, for the same amount of money, renters will now get a bedroom less than in 2020.

Between the two years, rents in Great Britain have risen by 16.2%. Which means the monthly rent is now £165 higher.

While the rent for one-bed flats rose by 10.4% compared to last year, four-bed flats now cost 6.6% more.

In London, rental growth is the fastest, with 33.6% higher rents than last year. However, this sharp rise has to be seen in the light of the pandemic, when many people moved out of the city centres in the search for more space inside and out.

With the end of restrictions and the move back to the office, workers flock back to the city, which has led to these sharp rises in rent prices.

But compared to January 2020, average rents are only up by 1.5% and are still the same as in July 2016.

Lack Of Rental Properties Driving Up Rents

Like with the sales market, the rental market has also seen the number of available rental properties dwindle. In July there were 9% fewer rental properties available than in July 2021.

And compared to July 2020, there are now 52% fewer rental properties on the market.

And while rising mortgage rates don’t impact renters directly, they might be affected indirectly.

After two years of record rental growth, tenants aren’t seeing their budgets stretch as far as they used to.  And they are likely to be squeezed further still by a mix of investors leaving the market and the landlords left behind looking to pass on their higher mortgage costs.  

Aneisha Beveridge, Head of Research at Hamptons

The lack of rental properties also means that potential renters have more competition. So in order to secure a home, they have to accept higher rents.

According to research by Dataloft, four out of 10 people under 30 have to spend over 30% of their salary on rent. Which is a level that many young people can’t afford.

Whether you are renting or buying, having too high expectations about your new home could cause a lot of disappointment. And many people will have to be prepared to accept less than they hoped for.


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