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First-Time Buyers and Housing Affordability

The difficulties facing first-time buyers in getting on the property ladder and the fact that many rely on financial assistance from the ‘Bank of Mum and Dad’ has been widely reported. However, a new report has revealed that many of these first-time buyers feel guilty about needing this help.

Reliance on Financial Support Becoming the Norm

The latest First-Time Buyers Report by Yorkshire Building Society shows that as many as 66% of UK adults aged 18-40 expecting to receive help from family to get their foot on the property ladder will feel remorse.
Despite this, a reliance on the ‘Bank of Mum and Dad’ appears to be becoming the norm, with 59% of would-be homeowners expecting to receive handouts from parents or other family members in order to buy a property. Around a third (31%) expect to put this financial help towards their deposit.
Just over 80% of these young adults expecting to receive help to get onto the property ladder believe it’s unfair that their generation is finding it harder to buy their first home compared to their parents’ generation. The majority (59%) of those expecting support are concerned that by accepting help it would negatively impact their parents’ future finances.

Tough Environment for First-Time Buyers

“In what is a tough environment for young aspiring homeowners, the ‘Bank of Mum and Dad’ continues to support young peoples’ dream of buying their first home,” commented Simon Broadley, Senior Manager at Yorkshire Building Society. “But while it’s clear that parents are willing, where they can, to help their children get on to the property ladder, the burden of how it could negatively impact their family’s finances is leading many young adults to feel guilty about accepting help.”
“There are many parts of the country where average house prices dwarf earnings,” he added. “Our survey shows how the financial and moral dilemmas facing first-time buyers remain acute regardless of whether they are fortunate enough to have parental support available.”

Housing Affordability Varies Across the Country

In a separate piece of research, the Yorkshire Building Society has revealed there are regional differences in the affordability of property for first-time buyers and home movers, and that the gap between the least and most affordable areas has almost doubled since the start of the economic downturn.
At a national level, since September 2007 affordability has improved by 0.6% in Britain overall, by 18.9% in Scotland, 17.2% in Wales but has worsened by 3.3% in England.
On a more local basis, homes in 54% of local authority areas – including Edinburgh, Birmingham, Peterborough, Leeds and Harrogate – are apparently more affordable now than they were before the financial crash due to wages increasing at a higher rate than property values over this period. 
However, property in London and most of the south of England are now far less affordable as house price rises have outstripped wage growth at a far higher rate.
According to the research, the greatest decrease in affordability has been in London, where buying the average home is now less affordable in every borough than it was before the credit crunch, dropping on average by 39%.
At the other end of the scale, Inverclyde saw the biggest increase in affordability, with homes now 42% more affordable than in 2007 and costing 3.67 times the average salary, followed by North Ayrshire, where homes are 37% more affordable (3.55 times the average wage).

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