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Job insecurity overtakes deposits as home ownership barrier

Job insecurity overtakes deposits as home ownership barrier

Prospective homebuyers have named job insecurity as the greatest barrier to owning a property, ahead of raising a deposit for the first time in a decade, according to the Building Societies Association.

In a May survey of more than 2,000 adults, two-thirds (65 per cent) stated job insecurity as the biggest obstacle to home ownership, compared with 35 per cent in March, before the coronavirus lockdown.

A lack of job security was last cited as the greatest barrier in June 2010.

Meanwhile, four in 10 said raising a deposit was the biggest obstacle to buying a property, down from 65 per cent in March.

Meanwhile, increased job security was the second most common factor (35 per cent) that people said would give them more confidence in the property market. This was just behind evidence that properties could be viewed in a safe manner (36 per cent). 

The survey also found that 45 per cent of people thought house prices would fall in the next 12 months, while 16 per cent thought they would rise. 

Paul Broadhead, head of mortgages and housing at the Building Societies Association, said: “These results mark the first time that ‘raising a deposit’ hasn’t been the biggest barrier to home ownership in a decade. 

“Many households have increased their cash savings during lockdown. If they grow more secure about their job prospects, this may enable buyers to put a little more towards a deposit, and if prices do moderate somewhat, it could help with affordability issues - especially for first-time buyers.

“Once the market settles back into some form of normality and confidence in job security rebuilds, we could see a fresh landscape that appeals to aspiring homeowners.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “For a long time, raising a deposit has been the biggest barrier to home ownership for first-time buyers. The gap between property prices and incomes has become so great that many have struggled to bridge it unless they have financial help from the bank of Mum and Dad in the form of a gifted deposit.

“However, it is a sign of the times that the deposit is now less of a concern than keeping your job. Covid-19 has wreaked havoc on the economy and while many workers have been furloughed, there is a worry that they won’t have jobs to go back to once the furlough scheme ends.

“Uncertainty about future employment prospects will impact people’s ability or desire to raise a mortgage, which is likely to be the case for a while to come.”

A separate survey by broker First Mortgage this month found consumers who had been furloughed were increasingly concerned about their ability to secure a mortgage.

chloe.cheung@ft.com