The NHHO Home Stretch survey 2007 found that approximately two-thirds of respondents would be prepared to reign in on socialising in favour of saving for a property, while their willingness to avoid buying clothes, reduce shopping bills and cut back on sports and leisure, demonstrate how the current housing market is forcing home seekers to accept a stripped down existence.
The survey, based on a sample of 1,000 respondents in the UK (comprising 500 homeowners and 500 home seekers), also revealed that a significant percentage of respondents would consider large-scale concessions, with one in three willing to sacrifice yearly holidays.
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Of even greater concern is that when asked what the ultimate sacrifice they would be prepared to make in order to own a home, genuine responses given by home seekers included selling, my husband, everything, and even a kidney.
The Savings Chasm
The research also exposed a degree of naivety amongst home seekers, with many having little understanding of how much they would need to save in order to get a foot on the ladder within their preferred timescales.
For example, 59 per cent of home seekers thought it likely that they would own a property within 2-3 years, and only 22 per cent believed they would not own a house by 2012.
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However with an average salary of £24.5K a year, and estimated savings of £10,000 to £12,000 by 2009, most first time buyers would struggle to borrow over £100,000 £120,000. Set this figure against the current average house price in the UK of £210,000 (rising to £354,000 in London) and the growing chasm between savings and aspirations towards home ownership becomes increasingly apparent.
Mark Vaughan, Director of Marketing, Notting Hill Home Ownership, said: When the borrowing capacity of the UKs home seeking public is set against the average national house price, the financial shortfall is alarming, and proves that optimism within the first time buyer market does not connect with the reality. Even if house prices do continue to level off as they are today, the chasm between average savings and house prices shows no immediate signs of being bridged. This means that for the majority of UK home seekers full property ownership is becoming an increasingly unattainable goal, regardless of the lifestyle concessions they are willing to undertake.
Dazed and confused
The Home Stretch survey also creates a picture of a poorly informed public, with 70 per cent of respondents agreeing that speculation from the media concerning the housing market causes them uncertainty and confusion with regard to buying a home. Furthermore, 63 per cent reported feeling confused with regard to the information provided by banks and building societies.
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Vaughan said: The confusion felt by respondents to the survey can be allayed through the provision of information in manageable, user-friendly ways and by demystifying some of the jargon typical of the housing market. Although seemingly obvious, measures such as these could have a far-reaching effect for both lender and borrower neither of whom are served well by the information currently made available.
A problem shared
The increasing desperation of home seekers to get a foot on the ladder could be a factor behind the number of respondents that are aware of shared ownership, which allows buyers to invest in an initial percentage of a property, paying a mortgage on that percentage and subsidised rent on the remainder to a housing association.
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More than half of home seekers said they would be prepared to own only a percentage of a house in order to get on the property ladder, while a further 20 per cent of the sample are either evaluating shared ownership at present or are involved in buying a shared ownership property. Furthermore 31 per cent of respondents stated that they would be prepared to share ownership of a property with a housing association.
The fact that one in three home seekers has considered shared ownership in the past, and that 20 per cent are currently evaluating it as an option suggests that after a decade of house price inflation, measures such as shared ownership are becoming increasingly relevant and even necessary to the home buyer of today.
Shared ownership should not be thought of as a silver bullet for the challenges created by the current state of the UK property market, but in recent years we have seen it change from a support function for low-income first time buyers, to a well travelled route towards home ownership.
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