First-time buyers in their twenties and early thirties today are rather less fortunate than their predecessors. Twenty years ago first time buyers would have needed about £2,500 deposit to buy their first house, assuming a 5% deposit against a £50,000 house. Today that figure is more like £12,500, assuming the minimum 10% needed against a £125,000 house.
For most youngsters, this sort of sum will need several years of diligent saving to achieve. And if these youngsters need to rent their own living accommodation in the meantime, it is easy to see why many first time buyers are unable to become homeowners before they reach their mid-thirties. The previous generation were usually able to get there about ten years earlier in their lives.
So, there is no early step onto the property ladder for today’s youngsters - unlike their parents, who had grown up with both the aspiration and expectation of accumulating wealth through property ownership, starting at an early age.
Indeed, in the last ten or twenty years many of those in their late fifties and early sixties were able to plan for a very comfortable retirement, on the back of rising house prices. The idea of trading up in the property market in order to finally cash in on the large family home, was seen as the smart thing to do.
Downsizing to something smaller and living very well with the pension supplement that their remaining equity would generate, through the purchase of an annuity or perhaps an investment property, became a reality for many of today’s more affluent pensioners.
This might seem like a fairy story for today’s hard-pressed youngsters, but I believe the aspirational appeal of owning one’s own property will never fade for young people of this and every subsequent generation. And aspiration is what drives the property market.
The good news is that after several years spent in the wilderness, I am now beginning to see first time buyers returning to the fold, having had sufficient time to build up their deposits, perhaps with a little parental assistance along the way.
And for an increasing number of those already on the ladder who have built up decent equity in their properties and who now wish to move to a larger house, conditions are increasingly good.
With selling prices still continuing to settle down to levels that buyers find attractive enough to act upon, and with some very attractive mortgage deals to be had for those with good equity, trading up is now a viable option for more and more young families.
In short, the market is looking very stable, and that means we should not expect any great swings, either upwards or downwards, in terms of activity levels or house prices. Last year brought a welcome return to the market of a good number of motivated buyers and sellers, and accordingly the market maintained a very healthy balance between supply and demand. I expect this to continue to be the case for 2013.