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Assetsure News 10th May
2007
First Time Buyers Down
The number of first time buyers entering the housing chain has dropped by nearly
8% in 12 months. It is now widely believed that property prices are simply too
high to encourage people to put their foot on the ladder. The problem is
escalated by many purchasers now hanging back from buying in the belief that
property prices may soon start to go backwards. Others are worried that with
interest rates on the increase, it is simply the wrong time to take a gamble on
the housing market.
The
council for Mortgage lenders have recently
released information that home affordability is at it's lowest for 16 years.
There are very few good fixed rate interest deals left on the market which is a
shame as this type of mortgage is increasingly being seen as a way of riding out
any interest rate increases, at least in the short term. According to
statistics, 88% of first time buyers prefer the security of a fixed rate deal.
Many worry that
home ownership has gone beyond the scope of
many people, young people in particular, face the daunting task of having to
save vast deposits and even if they do save enough money, servicing the loan
takes a vast chunk of their monthly salary. Trends are beginning to establish,
where young people stay at home with their parents for longer and perhaps in
years to come, homes will simply be passed from parents to children. One of the
reasons that property prices are high in the United Kingdom is the fact that
good quality cheap housing stock is often purchased by buy to let landlords as a
means of bolstering their pensions. These cheap starter homes are now alas
beyond the means of many first time buyers and many people are considered to
being permanent renters.
One of the options of course open to the government is to make more rural land
available to build homes on, certainly there is a shortage of property coming on
to the market, maybe it is time that the government gave serious consideration
for national starter home scheme to help the young and low waged get on to the
property ladder. Home ownership should not be seen as a luxury but more of a
necessity. The government sowed the seeds for the present buy to let glut by
making pensions and investments less attractive for investors and property has
simply become a commodity for investment. Whilst interest rate rises may cool
house price increases, it also makes purchasing property less attractive and we
could literally be only a short time from seeing some substantial reductions in
selling prices.
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Copyright Assetsure Limited 2007
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