First-time buyers lower expectations

When it comes to getting onto the property ladder, first-time buyers' expectations are going down as house prices go up.

The news is full of individual anecdotes highlighting the state of the market, whether it be newlyweds purchasing a converted public toilet block for the price of a Tuscan farmhouse or groups of professionals living together well into their late 30s as they can't afford to buy a place of their own.

While the broader picture may not be anywhere near as interesting, there has been a quiet shift of homebuyers' expectations over the past years, with the dream home now being put on hold in favour of something a little more downmarket.

According to new statistics from GE Money Home Lending, just seven per cent of first-time buyers in 1977 settled for second best when it came to their starter home.

However, economic realities now mean that this proportion has risen to 23 per cent, that's one in four happy to downsize their expectations for the sake of making a purchase.

Furthermore, while compromising on living space or even garden space is to be expected in this age of stratospheric prices is probably to be expected, a significant number of those buyers questioned in the study said that they would be willing to sacrifice even a bedroom in order to join the league of UK homeowners.

Gerry Bell, head of mortgage marketing at GE Money Home Lending said: "The fact that more and more first-time buyers are compromising their desires in a first home in order to get on the property ladder can largely be credited to economic factors such as rising house prices, however many are also delaying their purchase of a first home for lifestyle choices.

"Faced with other factors such as student debts and increasing interest rates, some are finding that they are making compromises in the type of home they wish to purchase, such as size and location, in order to fulfil their home buying aspirations."

Despite this willingness to bend over backwards, the number of first-time buyers in the UK continues to fall, with the number of inquiries from new buyers dropping at its fastest rate since August 2004 according to the Royal Institute of Chartered Surveyors.

While it may well be the case that many young professionals are in their rented homes sitting out the current uncertainty over interest rates and hoping that prices will fall in the near future, I think it is more likely that they are sat despairing and secretly hoping for their smug friends fall deeply into negative equity.

Indeed, it is the high cost of homes rather than the country "going to the dogs" that is cited as the major reason behind the record number of Britons packing their bags and leaving the country for good.

Should property prices remain out of the reach of first-time buyers, it seems highly likely that they will quit compromising and look overseas for their first home.