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First-time buyers need £4.2bn

Tuesday, 15 July 2008 12:00 AM

First-time buyers require some £4.2 billion in order to take their places on the housing ladder this year, and it is parents who will be footing the bill.

New research from the Children's Mutual finds 214,800 first-time buyers will seek to purchase a home in 2008, and will need an average of £19,780 each to fund their purchase - as the absence of 100 per cent mortgages hits home - or the lack of home.

Of these the Mutual predicts 110,000 potential first-time buyers will struggle to find the deposit and associated fees unless their parents step in.

"Even allowing for recent reductions in house values, historic house price inflation, combined with lenders' current abandonment of 100 per cent plus mortgages, means that it is all but impossible for first-time buyers to get a foot on the property ladder without a substantial deposit," said David White, chief executive of The Children's Mutual.

"Parents of younger children might look to the lessons of the present when preparing for the future and should consider saving for their children now."

However, only 48 per cent of parents felt in a position to financially contribute to their offspring's new property - leaving around 55,000 potential buyers in search of funds.

In response there are now calls for parents of young children to consider saving now to help the next generation of home buyers.

"We are set for a seismic shift in the way the UK manages its money. With easy credit rapidly evaporating, we're predicting a return to a 'save now, buy later' culture, which should be welcomed by most quarters," added Mr Cook.

The Mutual points to the Child Trust Fund as a measure designed to make it easier for parents to save for their children's futures, arguing the scheme will allow "debt free university education" which in turn could facilitate young people getting a foothold on the property ladder.

Further research from The Children's Mutual found that 40 per cent of today's teenagers believe buying a home in the future will be impossible without their parents stumping up the deposit.

Finally, more than a fifth of men aged 25 to 29-years-of-age are still living in their parents' home.

Chris O'Toole

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