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Research Reveals Unrealistic House Buying Expectations

New research by Halifax has given an interesting insight into how knowledgeable the next generation of first time buyers are about the house buying process and how realistic they are about getting on the property ladder. 

Unrealistic Expectations

According to the research, many are in for some unpleasant surprises when they eventually become ready to take the first step on the housing ladder.

It found that around 20% of 11 to 14-year-olds believe they will be able to borrow as much money as they want to buy a house. Researchers also found that a third of the same age group expect their parents to help finance their property purchase, and 21% believe the Government will help them to become home owners.

Home ownership continues to be an aspiration for many, with 59% of 18-21-year-olds believing it’s very important to own a home, however their perception of the costs and timescales involved appear to differ substantially from the reality.

One in five 11-21-year-olds in London think they can snap up a home from as little as £50k up to £200k. In reality, the average first time buyer house price in London is £422,580.

Around 27% of those aged 18 to 21 believe they’ll be homeowners by the time they are 25, however it is more likely they will have to wait another five years until they are 30, or 32 if they are planning to live in London.

Interestingly, 20% of 18 to 21-year-olds are counting on receiving an inheritance to pay off their mortgage, with males apparently being far more hopeful of this occurring than women (31% vs 18%).

Saving for a Deposit

The research by Halifax isn’t the first to find a substantial difference between house buying expectations and reality amongst first time buyers, particularly with regards to saving for a deposit.

Aldermore Bank found that saving for a deposit is the number one obstacle for 34% of first time buyers. However, it also found that prospective buyers are falling short in their estimations of how much they need for their first deposit.

On average, first time buyers are aiming to save an average of £34,3972, but figures from the Office for National Statistics actually suggest that the average deposit needed is £49,639. This means many first time buyers will be faced with a huge deposit deficit of 31%, or £15,388.

Prospective first time buyers are also under estimating the amount of time it will take them to save for this deposit. Almost three fifths (58%) believe they will be able to reach this goal within five years while in reality just half (51%) of recent first time buyers reached their goal in this time, and 16% took over eight years to get there.

“It is clear there is a divergence between perception and reality when it comes to the house buying process,” explained Charles McDowell, Commercial Director, Mortgages. “This often means those looking to buy are under-estimating the associated costs as well as the time it could take to complete, especially with first time buyers expecting it to take four years on average to save for a deposit.”

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