A report has revealed that first time buyers who purchased their homes in 2007 have lost around £11,000 off the value of their property.
Around 360,000 young homeowners are said to be trapped in homes they first purchased due to the fall in house prices according to a report by HSBC.
Many are being put into negative equity meaning their mortgage is now higher than the value of their property.
It seems almost impossible to move up the property ladder with added moving costs, in some cases homeowners can spend nearly a year’s salary trying to move home because of legal fees, moving fees, surveys and deposits.
The report shows it is estimated that around £208,675 is needed to buy a second home because of the ever increasing house prices.
Pete Dockar, head of mortgages at HSBC said: “These findings highlight the need to save or pay down an existing mortgage in order to fund that second step on the property ladder; first-time buyers can no longer rely on rising house prices to provide them with the deposit needed for their second purchase.”
There is also a certain amount of pressure to save for a house felt by young people and those who are yet to get on the property ladder due to the challenge of everyday living costs constantly rising.
However more people are choosing to rent rather than buy a house because of the cost that goes into buying, once the rented route is chosen it is hard to save for a mortgage.
The area which has been hit the worst by negative equity is Northern Ireland who have seen a 42% decrease in the value of homes.
The only area that seems to not be affected is London; housing prices have not dropped since 2007.
The housing crisis is said to be delaying major milestones in people’s lives such as marriage and having children.
The advice that is being given to younger buyers trying to climb the property ladder is to try and save the deposit for a second home while paying off the first mortgage which in the current financial climate seems like an impossible task.
With house prices still raising it could be a long time before first time buyers are able to purchase their second home in the current financial climate.
© Copyright Autonet Insurance
By Amanda Bainbridge