Thanks to skyrocketing property prices, rising living costs and a lack of wage growth, first time buyers are finding it harder than ever to purchase their own home.
People in their twenties and thirties are struggling the most and the problem isn’t exclusive to those living in the capital where prices have been famously high for many years.
However, there is one group of people who are managing to successfully make their first step onto the ladder, and that’s those whose parents are in a position to help them financially.
An increasing number of first time buyers in Manchester are receiving help from their parents either in the form of gifted deposits or the opportunity to move in with mum and dad to save money on rent and bills.
In an interview with the Manchester Evening News, 66-year-old Eddie Johnson explained that he helped his daughter Helen, 33, purchase her own home four years ago.
The retired civil engineer said: “I decided to help Helen as it would have taken her a long time to save for a deposit on her own.
He added: “With house prices rising so quickly, it didn’t seem sensible for her to continue renting when I was in a position to help. It turned out to be a good investment in the long run, as when she came to sell the house it had increased in value significantly.”
Rob Kennedy, director of Philip James adds: “Increasingly first time buyers are viewing properties and offering subject to their parents viewing it.
“In places such as Didsbury where the average price for a terrace or apartment is over £250,000, the only way many buyers can afford the prices is by help from parents.
“It tends to be buyers whose parents live locally who have benefitted at first hand from recent price rises in the Didsbury area, so feel the investment is a safe one.”
According to a report by the Social Mobility Commission, 34% of first time buyers in the UK rely heavily on their parents’ money when buying their own property. Five years ago, this figure stood at just 20%.
The same report also found that home ownership has plummeted amongst those aged 25 – 29 by more than half in the last 25 years.
The report’s lead author, Dr Paul Sanderson from Anglia Ruskin University said: “Going forward, the gap is likely to continue between those in the UK who can acquire that most significant of financial assets, the family home, and those who cannot.
“Only better-off young people and those who have parents who have already accumulated housing wealth are likely to be able to consider home ownership without radical changes to the housing market.”
If you’re a first time buyer looking to buy a home of your own, you may be wondering whether your finances are strong enough. After all, not only will mortgage providers want to see that you have a healthy deposit saved, they’ll also look at everything from your income to your credit rating.
With so much to think about, it may be worth getting in touch with a mortgage advisor for help and support. Here at Philip James we have a team of independent financial advisors on hand to help guide you through the entire process from the early mortgage application stage right through to completion. For more information, please don’t hesitate to get in touch with our team.