Cost of Property Still the Biggest Challenge Facing First Time Buyers

COVID-19 delaying home buying plans for almost half first time buyers, while accelerating plans for nearly one in four.

Half of first time buyers (52%) in a Bank of Ireland survey conducted towards the end of 2020 revealed that the single biggest challenge facing them is the cost of property. The survey also revealed that a lack of supply in desired areas (20%) and the ability for borrowers to save enough for a deposit (18%) continue to be seen as obstacles preventing people from getting on the property ladder.

The onset of COVID-19 has been a major factor in the house buying process, casting a shadow over some financial decisions in the current climate. Almost half of respondents (48%) revealed that the impact of the public health emergency delayed their plans to buy a home, while almost one in four (23%) said the pandemic had accelerated their plans to buy a home. One in five (21%) said that COVID-19 has made them rethink the location they would like to buy in, with a similar proportion (22%) rethinking the type of property they would like to buy.

In keeping with rising savings levels driven by reduced day-to-day spending opportunities, the average amount first time buyers are putting aside for a deposit has grown in 2020 when compared with previous years. Nearly a quarter (23%) of those surveyed are now saving between €500 and €750 per month, a 5% rise on the 2019 findings. Between €250 and €500 is still the most popular monthly amount saved by more than one quarter (26%) of respondents.

More than half (55%) of first time buyers will still require financial help from friends or family to save for a mortgage, with 27% moving in with their parents for a time to enable them to save more. In another sign of the times, there is a marked increase this year in the levels of respondents living outside of Dublin (74%, up from 62% in 2019), signalling that with many offices in the capital currently closed to the COVID-19 restrictions an ever increasing number have returned home from Dublin. On a similar trend, just one in four respondents said they were hoping to buy in Dublin, down from one in three when the survey was last conducted in February 2019.

Discussing the survey results, Brian Vaughan, Head of Mortgages, Bank of Ireland said: “The survey provides a snapshot of the challenges facing first time buyers, who not only have to make sacrifices in saving for their first home, but must also navigate the challenges that Covid-19 has introduced. The pandemic has delayed the plans of almost half first time buyers, while it has accelerated things for almost one in four, realising perhaps that their current living arrangements aren’t suitable. While the cost of property is still a prominent issue, the research is also showing an increasing number of first time buyers saving larger amounts towards their deposit, driven most likely by the lack of spending options this year.

“Through our discussions with first time buyers we can see that many have had to adjust their plans to reflect the current reality. But this is something our mortgage team are well equipped to deal with, and we would encourage anyone who is thinking of putting their purchasing plans on hold to come and talk to us, we are here to help. We can offer features such as Cashback, providing 2% of the mortgage back as cash up front, which is very popular with first time buyers. With the survey revealing that 31% of people are hoping to buy or build within the next six months we look forward to helping as many people as possible start on their home buying journey.”

*Research was conducted by RED C between November 2nd and 3rd 2020 with 204 people aged 25-45 who are planning to buy or build their first home in the next few years.