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What would you do to get on the housing ladder?

What would you do to get on the housing ladder?

Category: Mortgages

Updated: 09/10/2014
First Published: 09/10/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

What would you do to get on the housing ladder? It's a question that a lot of would-be homeowners need to ask themselves, particularly with house prices rising so rapidly in the last few years, and it seems that some will go to extreme lengths to realise their dream.

Making sacrifices

Research from Santander has shown the measures people will go to in order to get on the ladder, and while some of them are expected – such as cutting back on luxuries – some are on the more extreme end of the scale. In fact, 7% of those surveyed would consider emigrating if it meant they could afford their own home, while 9% would willingly change jobs or relocate to a more affordable area.

It seems that the younger generation are even more willing to make these kinds of extreme sacrifices, with 11% of 18-24 year-olds surveyed being willing to move out of the UK and 23% saying they'd change jobs. They're also more likely to opt for the more conventional measures, with 41% happy to sacrifice non-essential spending (such as holidays or cars) compared with 20% of the general population, while 37% would reduce their standard of living (such as buying cheaper food or visiting friends less) to make the necessary savings.

It just shows how important homeownership is to many Brits, particularly younger individuals, and even though 49% of non-homeowners are resigned to the fact that they may never be able to afford their own home, the remainder will take on a range of measures in order to save.

What would you do?

So, would you do any of the above? You may be put off by some of the more extreme measures, but your top priority should always be cutting down your spending wherever you can. Making sacrifices now will pay off in the long run – you might have to forego a year or two of holidays and new cars, but you'll have a house at the end of it!

Even making small changes, such as forgoing your morning takeaway coffee for homebrewed, or going for cheaper brands at the supermarket, could make all the difference. Make sure you squirrel away all those extra pennies in a suitable savings account, too, and you could quickly see your savings pot add up.

The biggest barrier

However, it can't be denied that saving enough will be a challenge. The biggest barrier to homeownership is still being able to raise a suitable deposit, and although it's possible to buy a home with a deposit of just 5%, that 5% can still be a significant sum, particularly with such high house prices.

But, there are tentative signs that the market could be slowing down. Latest figures from Halifax suggest that house price growth may have even peaked, with an annual growth rate of 9.6% being recorded in September – down from the 9.7% seen the previous month and the 10.2% in July, putting the typical UK home at £187,188. Of course, that's still pretty high – you'd need to find £9,3594 if you wanted to put down a 5% deposit – but the fact that prices aren't rising quite so rapidly has got to be good news for prospective buyers.

"The recent rapid rise in house prices in some parts of the UK, earnings growth that remains below consumer price inflation and the possibility of an interest rate rise over the coming months, appear to have tempered housing demand," said Martin Ellis, housing economist at Halifax. "This weakening in demand has led to a modest easing in both house price growth and sales."

This follows findings from the Bank of England's Credit Conditions Survey, which revealed that both supply and demand for mortgages had dropped in the three months to September. The number of house sales has also eased, falling by 1.5% over the same period, while mortgage approvals have dropped for the second consecutive month, along with the number of new buyer enquiries. CML figures also revealed a slight drop in mortgage lending over the summer, which all points to a slowing – and ideally stabilising – market.

"Annual house price inflation may have peaked at around 10%," concluded Martin. "A moderation in growth looks likely during the remainder of 2014 and into next year as supply and demand become increasingly better balanced."

Realise your dreams

The fact that the market is becoming more balanced will be great news for a lot of prospective owners, as will the announcement that fixed mortgage rates are actually dropping – Moneyfacts' figures show that the average two-year fixed rate is now just 3.39%, the lowest seen in the last year, so now's a great time to take advantage of it! If you've made the necessary sacrifices and have built up your deposit, start comparing the best mortgage rates and see if you can realise your dreams.

What next?

Compare first-time buyer mortgage deals

Compare savings accounts to build your deposit

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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