According to a new NerdWallet survey of 2,000 people in the UK:
- More than two in five (42%) people who planned on buying a house in 2022 failed to do so.
- One in five (20%) people now feel worse about their ability to buy a home in 2023 compared to last year.
- Over one in three (37%) people won’t buy this year due to the cost of living crisis, and more than a quarter (28%) because of high mortgage rates.
- More than two-thirds (68%) of younger buyers are willing to compromise to buy.
Read on to find out more about how the UK’s home-buying aspirations are being affected by concerns over the cost of living and the economy, and the steps people can take to give them a better chance of realising their property ownership dreams.
Two-fifths of buyers missed out last year
It probably won’t come as much of a surprise that 2022 proved frustrating for many aspiring home buyers.
While one in five people (19%) had intentions to buy a house last year, our survey revealed that 42% of those were unsuccessful in doing so. For many, it was the economic situation which put paid to their home-buying dreams.
Why didn’t people buy last year?
Worries about the cost of living crisis were the biggest factor at play, with 36% citing this among the reasons that they did not buy a property in 2022.
Exactly one in three (33%) said that being unable to find a property which was suitable for their needs and within budget had played a part, while 32% said that they had decided to wait because they were concerned about the economic uncertainty.
In a similar vein, just over a quarter (27%) chose to delay to see whether property values would fall.
Meanwhile 17% of people said they didn’t buy because they couldn’t find a suitable mortgage. Arguably, this number might have been even bigger had the ill-fated mini budget – after which mortgage rates spiked and huge numbers of products were withdrawn from the market – been earlier in the year than September.
In some cases, individual circumstances changed (25%), while for others pausing to build up a bigger deposit became the priority (23%). Some people (9%) simply changed their mind about home ownership, at least for the time being.
» MORE: How much house deposit do you need?
Optimism still in short supply in 2023
Sadly for those who postponed buying last year with a view to revisiting their options again in 2023, the home-buying landscape doesn’t appear to have improved.
Overall, of those with a definite opinion, one in five (20%) people are currently feeling worse about their ability to buy a home in 2023 compared to last year, while 14% think their situation is better.
Optimism is in particularly short supply among 25- to 34-year-olds, of whom 28% feel their circumstances are less conducive to buying now relative to last year.
Why aren’t people buying this year?
As to the reasons that individuals feel they can’t currently pursue their home-buying dreams, 37% of those who were hoping to buy this year said it is the cost of living crisis that is holding them back.
Even though mortgage rates are no longer as high as they were immediately after the mini budget, more than a quarter (28%) of people said the increased cost of mortgages is preventing them from buying right now. With this figure rising to 41% among 18- to 24-year-olds, high mortgage rates are proving the biggest barrier to the younger generation of prospective home buyers.
Others are sensibly considering what might happen in the future, with 18% saying concerns that mortgage rates will rise are preventing them from buying at present.
Meanwhile, people feeling their income is too low (27%) and that there is a lack of available homes within budget (25%) both reflect the increased affordability pressures potential home buyers are experiencing.
Given that one in five (20%) people are not currently buying due to concerns over their future personal financial situation, it’s hard to see how this pressure on affordability will ease any time soon.
» MORE: What to do about higher mortgage rates
When do people think they’ll buy?
As a result, it’s perhaps unsurprising that only 2% of those thinking about purchasing a property in the future, whether as a first-time buyer or a home mover, would like to do so within the next year.
Almost a third (32%) have a target of buying within the next five years, making it the most popular target time frame overall.
While just under one in five overall (17%) would like to buy within two years, this rises to 38% among 18- to 24-year-olds, who perhaps understandably appear the most impatient to make a move.
For others, there is an intention to buy, but they are either looking to the long-term – 11% are hoping to purchase within the next 10 years – or they don’t have a clear date in mind of when this might be (39%).
» MORE: Calculate how much your mortgage repayments might be
Majority are willing to compromise
The number of apparent barriers to buying probably helps to explain why most people (51%) are willing to consider an element of compromise on the next property that they buy.
An acceptance that some aspects of their wish lists may not be ticked off is again strongest among younger buyers, with over two-thirds (68%) of 18- to 24-year-olds knowing a trade-off of certain priorities is likely to be necessary.
What concessions will people make?
That the number of bedrooms (36%) is the most popular compromise buyers are willing to make is perhaps surprising. However, it could also be a further sign of the affordability challenges being felt at present, as forgoing an extra bedroom can usually make a significant difference to the price of otherwise comparable properties.
Around one in three people are willing to make concessions on various factors, including the number of bathrooms and toilets (34%), being close to good schools (33%), and being close to a city or large town centre (32%).
Over a quarter (28%) said they would potentially compromise on their proximity to work, perhaps also reflecting a rise in the number of people working from home, or having to visit the office less frequently, since the Covid-19 pandemic.
At the other end of the scale, living space and parking (both 16%) were the facets of a new home that people were least willing to compromise over.
All eyes on house prices
In an age where the reporting of house price data has become a staple of media of all kinds, that as many as two-thirds (67%) of those looking to buy a property think about house price trends when doing so isn’t unexpected.
It also means people have considered opinions on what they think will happen to house prices next, and the majority of those we surveyed, and who had a view, believe values will fall in the next year – just under half (46%) expect them to drop slightly, while 8% are predicting a house price crash.
Only 13% think prices will remain broadly unchanged, while a third of people (33%) expect prices to rise.
How do you expect house prices to change in the next year?
However, in another sign of the pessimism felt by young people about affordability, rising prices are predicted by 40% of those aged 18 to 24 years old.
Regardless of age, more than four in five people (82%) think property prices in the UK are overpriced.
» MORE: Calculate how much you could borrow for a mortgage
7 steps to help fulfil your home-buying dreams
Do your research
Learning as much as possible about the location you’re hoping to buy in and how the property market works in that area is a must. Regularly browsing property websites and getting in touch with local estate agents can help you get a feel for the price you might need to pay and how quickly houses tend to sell.
Consider something to fix up
Modern homes that have the perfect finish may come at a premium compared to properties that are in need of a little love and attention. If you’re OK turning a blind eye to that bathroom until you can bring it in line with your tastes, or comfortable taking on a bigger refurb project, older or less well-kept properties could prove a bargain.
Think about the things you don’t need
Prioritising what is really important to you in a property, and disregarding some of the nice-to-haves, could bring some more affordable properties on to your radar. For instance, do you need that third bedroom if you don’t have kids, and is having a railway station on your doorstep essential if you work from home?
Cast your net a little wider
While you may have your heart set on a very particular location, it’s always worth looking just that little bit further afield. Prices can easily vary between neighbouring postcodes, and even within the same postcode too.
Monitor the mortgage market
There’s no dressing it up, mortgages aren’t as affordable as they have been. That said, there are still some good deals available, and knowing exactly what you can borrow, and finding the best mortgage for you, is always a must when buying any property.
Get your finances in order
Finding the right mortgage is one thing, but actually getting it is the next. Lenders will look at your finances thoroughly to make sure you can afford what you want to borrow, so you need to check first. Can you cut back on some non-essential spending, have you saved all that you can, and is your credit score as good as it can be?
Look into government schemes
If you live in England, and you’re struggling to get on the property ladder, initiatives such as the First Homes Scheme or Shared Ownership could be worth exploring. You can find similar schemes throughout the UK. And when you’re saving for a deposit, there’s a 25% government bonus available if you put your funds in a Lifetime ISA.
The survey was conducted by OnePoll on behalf of independent financial comparison site NerdWallet between 30 and 31 March 2023. It polled a nationally-representative sample of 2,000 adults in the UK. OnePoll is an MRS Partners Company and its employees agree to adhere to the MRS Code of Conduct and MRS Company Partners Quality Commitment while undertaking research.