The rental market is set to benefit from a surge in potential buyers putting their purchase plans on hold.
Data from NerdWallet UK shows that 42 per cent of those who planned to buy homes last year but failed to do so were frustrated by concerns over the cost of living, while other high percentages cited a shortage of available properties or broader worries about economic uncertainty.
Tim Leonard, personal finance expert at NerdWallet, says: “Buying a property over the last 18 months has become increasingly more challenging, with rising inflation and interest rates making it more difficult for people to save for a deposit and fees, and pass lenders’ mortgage affordability tests.
“First-time buyers are likely to be struggling more than ever to achieve their homeownership dreams, while there are considerable challenges facing existing homeowners who are hoping to move too, potentially leaving people stuck in homes that may not be right for them, or they can barely afford.”
And the future doesn't feel any brighter for many wanting to buy.
The research suggests that those who postponed buying last year with a view to revisiting their options again in 2023 believe the home-buying landscape has not improved.
One in five of those with a definite opinion said they are currently feeling worse about their ability to buy a home in 2023 compared to last year. And it’s the younger generation where optimism is particularly low, with just over a quarter of 25 to 34 year olds feeling their circumstances are less conducive to buying a property now, in comparison to last year.
In a similar theme to last year, 37 of those who were hoping to buy this year said it is the cost of living crisis that is holding them back. The regular interest rate increases are also posing a problem, with over a quarter of people saying the increased cost of mortgages is preventing them from buying right now. This figure rose to 41 per cent among 18 to 24 year olds, showing that high mortgage rates are proving to be the biggest barrier to the younger generation of prospective home buyers.
As a result of the pessimistic outlook, only two per cent 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.