A third of first-time buyers believe now is a good time to buy a home, despite more than half – 54% – expecting house prices to continue rising this year, a trade group found.
The Building Societies Association (BSA) found that the confidence to purchase was higher among aspiring homeowners, as just a fifth of all adults felt the same.
This sentiment among first-time buyers was also double the share compared to the same period a year earlier in December 2023, when just 16% said it was a good time to buy.
Despite the looming rise to the stamp duty threshold, just 22% mentioned this as an obstacle to buying a home. This dropped to 16% among first-time buyers alone.
Around two-thirds of people said the biggest barrier to homeownership was affording monthly mortgage payments and raising a deposit.
However, first-time buyers seemed to be less concerned, as just 51% cited monthly payments, down from 62% in December 2023, and 52% said raising a deposit was a challenge, compared to 55% previously.
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Just 6% of homeowners said they were worried about meeting mortgage costs, down from 12% previously. This was also the lowest proportion of people who had reservations about affording payments.
Only 1% of respondents said they were not confident at all about keeping up with monthly payments.
First-time buyer confidence is ‘encouraging’
Paul Broadhead, head of mortgage and housing policy at the BSA, said: “It’s encouraging to see that first-time buyers’ confidence in the housing market has grown significantly in the last 12 months. Although there were fewer bank rate cuts last year than had been expected, the two reductions did mark a significant turning point in what has been a difficult three years.
“However, we know only too well that confidence in the housing market can be fragile and change quickly. First-time buyers will be hoping the Monetary Policy Committee makes another cut to the bank rate today, to further ease their affordability pressures. But with political developments around the world and in the UK causing uncertainty in the financial markets, the bank rate cuts this year may again be fewer and potentially later than current forecasts.”
Broadhead added: “Despite their optimism, we know that first-time buyers face an unprecedented affordability issue and the BSA has repeatedly called for a long-term strategy that will increase the number of first-time buyers.
“The Financial Conduct Authority’s (FCA’s) mortgage lending review, which we hope will consider the relative costs and benefits of stricter regulation versus the social benefits of homeownership, should help deliver greater mortgage innovation to meet the needs of prospective homebuyers. For example, allowing part repayment, part interest-only lending, and the flexibility to shift between them, could improve affordability for many and be the difference between being able to get on the property ladder or not.
“Building societies have a proven track record of lending responsibly and supporting first-time buyers and want to do more. We are therefore very keen to work with the FCA to achieve this.”
