At a national level, affordability is already a challenge, and for many potential buyers, that can be enough to put them off from even trying.
But the national view only tells part of the story. What buyers think is possible – and what actually is – varies significantly depending on where they live.
The regional data from Pepper Money’s Specialist Lending Study makes that clear.
In every region, there are buyers who feel locked out of the market, but the reasons why vary.
In the North East, for example, one in five people have no savings, which is the highest of any region. At the same time, nearly two-thirds (65%) think they need at least a 15% deposit or don’t know what deposit is required.
That combination could be putting off buyers who are closer than they think. With an average property price of £158,000 in the North East, a 5% deposit would be as little as £7,900. Yet 40% of adults in the region don’t think they’ll ever be in a position to buy.
In London, the picture is completely different, but the outcome can be similar. Nearly three-quarters (73%) either believe they need a deposit of 15% or more, or don’t know what’s required.
Higher house prices do make it harder to get onto the ladder in the capital, but perceptions can still act as a barrier. Some may not seek advice that could open up options such as affordable homeownership or first-time buyer products.
A 5% deposit on a 50% shared ownership purchase could be less than £14,000 in the capital (average house price £540,000). Even those without a large savings pot might think differently if they realised the bar wasn’t as high as they’d feared.
In the North West, 68% of people would like to buy a home, but 34% think they’ll never afford it. At the same time, 69% either believe they need at least a 15% deposit or don’t know what’s required. With an average property price of £214,000, a 5% deposit would be around £10,700, compared to £32,100 at 15%.
The challenge isn’t just affordability or deposit, but also confidence for some aspiring homeowners. A significant proportion of potential buyers have already decided homeownership isn’t possible for them.