Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “First-time buyers are in a tough spot, with the affordability squeeze from high mortgage rates and broader cost-of-living pressures shattering dreams of homeownership. Fast rising rents haven’t helped matters, reducing disposable income to put toward saving for a home purchase – forcing many to delay their plans to buy a home.
“There are still considerable regional differences. Some areas have seen a more pronounced deterioration in affordability. First-time buyers have all but abandoned the London housing market because of the heightened cost of owning a property in a capital. Only 24,323 Londoners bought a house for the first time between January and August 2023, a 9% drop from the same period in 2013. The South East of England - which has the second-most expensive average property prices in the UK – suffered the biggest decline in first-time buyers this year. But there are still regions where the affordability squeeze is less acute and gazumping and bidding wars are rife.
“Falling house prices and mortgage rate should be good news for buyers, but for many they aren’t falling fast enough to alleviate the affordability pressures. Getting on the property ladder remains a tall order for many first-time buyers. The Bank of Mum and Dad is also facing its own cost-of-living challenges and, for many, can’t be relied on to provide much needed financial support.
“The affordability hurdle remains insurmountable for many prospective buyers despite recent falls in house prices, mortgage rates and inflation. Many first-time buyers are playing the waiting game in hope for a fully fledged crash in house prices and in hope of a better mortgage deal in the near future. Those waiting for house prices to fall further before buying should bear in mind that trying to time the bottom of the market is nigh on impossible – you could easily miss the moment.”
Rightmove: homes in need of renovation are the most in-demand among buyers
Myron Jobson says: “Fixer-upper properties can be seen as a pathway to home ownership for those who are facing budget constraints amid the affordability squeeze.
“When affordability is tight, properties that need some TLC often come with a more modest price because of the additional time, effort, and expense involved in renovations. But some buyers might not be put off. People see fixer-uppers as blank canvases, ripe for transformation. By rolling up their sleeves and investing in renovations, they believe they can make a property more valuable over time.
“One of the most common dangers with doer-upper properties is underestimating the cost of renovations. It is easy to overlook hidden issues, unexpected repairs or rising costs of materials and labour. These projects also take time, and unforeseen issues can cause significant delays. So, while buying a fixer-upper can be rewarding, it is important to be aware of the dangers and challenges.”
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