First time buyers in the UK are worried about finance and finding the right property

Some 25% of those who intend to buy a home in the UK in the next 12 months will be doing so for the first time, still well adrift of the 40% level traditionally seen prior to the credit crunch, research reveals.

Rightmove’s first time buyer forecast for the final quarter of 2012 also shows that more than a third of prospective first time buyers cite raising enough of a deposit as their single biggest concern and a fifth will only have managed to raise a deposit of less than 10% by the time they are ready to buy, excluding them from the most attractive mortgage deals.

While the deposit challenges set by lenders continue to keep first time buyer levels muted, there are other obstacles for first time buyers to overcome if they are to realise their ambition of owning a home, including finding a suitable property to buy, affordability in their neighbourhood, and accessing a competitive mortgage deal.

‘The list of challenges to get onto the property ladder seems to be getting longer rather than shorter. Raising enough of a deposit stubbornly remains the major concern for intending first time buyers, but we are now also seeing how the issues facing second steppers are affecting the fortunes of first time buyers in terms of finding a suitable property to buy and local affordability,’ said Miles Shipside, Rightmove director and housing market analyst.

Some 29% of prospective first time buyers indicated that their single biggest concern is finding a suitable property to buy, up from 24% a year ago.

Research from Rightmove recently revealed that the curse of negative equity has hit second steppers, that is those who would also be first time sellers, the hardest. Around one in five second steppers believes they are currently in negative equity and therefore reluctant or unable to come to market.

The shortage of new properties to market from this group in turn restricts the supply of properties that often suit first time buyers. Rightmove’s research shows that the typical first time buyer is looking to spend around £150,000, yet the supply of new properties to market at or below this level in October was down 5% compared to last year.

‘That the travails of today’s second steppers can negatively impact tomorrow’s first time buyers is a great example of how interconnected the housing market is. The credit crunch has hit those who bought for the first time around the peak of the market hardest, with more second steppers stating that they have fallen victim to the curse of negative equity than any other group of homeowners,’ explained Shipside.

‘The result is that many have become mortgage prisoners who are unable to place their home on the market, leaving some areas with a comparative shortage of suitable first time buyer homes. This also helps underpin prices in an area, further hurting first time buyer affordability,’ he added.