Deciding to buy your own home for the first time is an exciting and life-changing step. For many people, it represents a chance to build for the future and put down roots. Others may see it as a business opportunity, hoping to build up a portfolio of properties to sell and rent. Whatever the motivations are, there are several challenges that people face as first-time buyers.
Here are some of the most common problems faced by first-time buyers.
Lack Of Available Housing
Hand in hand with the rising cost of housing, there is also a shortage of new houses being built. This is in part to there being less suitable space for new houses to be built. As a result, this has driven up construction costs. This means that building companies are unable to build as many houses as they could afford to in the past.
This has made competition for housing increase over time, and as a result, first-time buyers can be squeezed out by those who are financially better off or more experienced in the housing market.
Older generations of homeowners grew up in an age when a “job for life” working for the same company over an entire career was seen as the norm. This meant that many people were able to take their first steps on the property ladder knowing that they would always be guaranteed a steady income – and healthy pension plan – to help pay off their mortgage and their household bills.
Whilst the current unemployment rate stands at just 5.8% compared with nearly double that in the mid-1980s, the employment landscape has changed. Due to a much more competitive marketplace, job security has become more fragile and fewer people are likely to remain working for one company their entire career.
The impact of this is that without the financial benefit of a ‘safety net’, some potential first-time buyers can see buying a house as much more of a gamble than their parents or grandparents did in the past.
Difficulty Getting A Mortgage
Since the global recession of 2008/2009, banks have become increasingly more reluctant to award mortgage loans to all kinds of property buyers, not just those who are looking to buy for the first time. Those who have successfully made payments over a period of time are seen as less of a gamble by the banking sector than first time buyers with little or no credit history.
The current reluctance by banks to lend money means that buyers have to pay higher deposits on their mortgages, which acts as a deterrent to people who are unable to save up the required amount.
Unfamiliarity With The Process
Aside from the financial barriers that make buying property difficult for first-timers, the complexity of buying a house can be off-putting for some. In spite of the hurdles that first-time buyers face, people should not be entirely put off by the process. First-time buyers can thrive with the right advice and the right motivation.