Posts with tag: first time buyers

First Time Buyer House Prices Now at Record High

Published On: June 29, 2016 at 8:51 am

Tags: Brexit,first time buyers,house prices,private rental sector,property ladder

The average house price for a first time buyer has risen to a record high, despite uncertainty hitting the wider market ahead of last week’s EU referendum, according to the latest research by estate agents Your Move and Reeds Rains.

In May, the average first time buyer paid £173,282 to get onto the property ladder, up by 2.7% from £168,656 in April and by 15.8% from May last year. First time buyer house prices have now surged by more than £23,000 in the past 12 months, with the current average price being the highest on record.

Across the whole property market, house prices dropped slightly in May ahead of Thursday’s EU referendum, with the latest report from Your Move and Reeds Rains showing a monthly fall of 0.4%. However, the bottom of the market defied this trend, with strong demand from first time buyers.

Completed first time buyer sales totalled 24,900 in May, just 0.8% lower than the 25,100 recorded in April, despite many first time buyers being held back by a lack of homes coming onto the market ahead of the Brexit vote. The general trend remains strong, however, with first time buyer numbers now 13.2% higher than the 22,000 seen in February, and up by 5.1% on last year.

The Director of Your Move and Reeds Rains, Adrian Gill, comments: “May saw a crunch in the number of homeowners putting up a for sale sign, as many sellers held back to see the result of the EU referendum. But Brexit worries haven’t dented first time buyers’ appetite to own their own home. Many still want to capitalise on the record low mortgage rates available at the moment, which means that monthly mortgage repayments are increasingly affordable.

First Time Buyer House Prices Now at Record High

“The Brexit result won’t change the fact that huge numbers of aspiring first timers want to buy a first home, and lots won’t want to wait out the two years until the renegotiations over the EU have been completed. In the short-term, the wider market wobbles may benefit first timers, giving them the leverage to negotiate harder and get a good deal on purchase price. Canny first timers will use any Brexit lull as a chance to snap up a good deal and get on the housing ladder.”

He continues: “New builds still have a part to play in absorbing first time buyer demand. But the biggest and most immediate improvement would come from stimulating more activity from the top of the tail of the housing market. Just as many first timers can’t find the one-bed flats or two-bed houses they are typically looking to buy, some second steppers can’t find the three-bed homes they want to move into to suit their growing families. Even last time buyers looking to downsize and free up their larger family homes are often struggling to find suitable properties for sale. Housing chains are clogged up right the way through, from first time to last time buyers. The Government should support our sellers, making it cheaper to move house and adding much needed energy back into the market. Houses for sale are getting snapped up very quickly in this climate, but many more sellers are needed.”

First time buyer mortgages

The average mortgage rate for a first time buyer dropped further in May, to 3.08% – a new record low – following a fall of 0.37 percentage points over the past year.

Despite rising house prices, these cheaper rates mean that mortgage repayments have not increased significantly as a proportion of a first time buyer’s income. As of May, mortgage costs accounted for 21.1% of income – just 1.7 percentage points higher than a year ago.

Meanwhile, the average first time buyer deposit currently stands at £27,669, up by 12.8% (£3,146) from £24,523 last year. When compared to the average first time buyer income of £39,651, this represents an extra 29 days’ salary. As a proportion of income, the average deposit has risen by 6.1 percentage points over the past 12 months.

Gill says: “High LTV [loan-to-value] mortgage options like the Help to Buy schemes are giving more first time buyers a fighting chance of getting on the housing ladder. But putting together a chunk of cash to put down on a property remains problematic for many. Some first timers are helped by the bank of mum and dad, or through an inheritance or gift from a family member. Others are forced to move home with their parents while they save. But most continue to struggle to save while paying a considerable proportion of their income on rent.

“This highlights the importance of the rental market to first time buyer prospects. Maintaining a healthy private rental sector (PRS) is absolutely key to achieving homeownership aspirations. The Government’s current agenda – managing landlord demand by taxing the PRS more heavily – is likely to filter through to tenants in the form of higher rents, making the challenge of saving for a deposit even more difficult. The new PRS policies may well hurt the very demographic they are trying to help – first time buyers.”

Regional differences

In four UK regions, the average first time buyer house price now tops £150,000, including the East of England (£161,088), the South West (£165,068) and the South East (£229,828).

London remains the most expensive region to buy a first home. First time buyers in the capital now pay an average of £338,074 to get onto the property ladder, saving an average deposit of £84,138 and taking out a mortgage worth £153,936. Despite these high costs, a total of 11,700 first time buyers in London purchased a property between March and May this year.

The North East and Northern Ireland are the cheapest areas for first time buyers to purchase a home. The average first time buyer home in the North East – currently the cheapest region – stands at £106,022, less than a third of the cost of the average price in London. These cheaper costs allowed 3,300 first time buyers to purchase a property in this region between March and May.

With many homeowners said to be discouraged from selling following the Brexit vote, the number of properties coming onto the market may dwindle, which could lower first time buyer levels. If you are considering an investment in the buy-to-let sector, use this period of uncertainty to purchase a lucrative property asset.

Stamp Duty Deadline Causes Huge Drop in Buy-to-Let Borrowing

Published On: June 16, 2016 at 8:31 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,finance,first time buyers,mortgages,Stamp Duty

The 1^st April Stamp Duty deadline has caused a huge monthly drop in buy-to-let lending, according to the latest Council of Mortgage Lenders (CML) report.

Landlords borrowed £2.5 billion in April, down by a huge 65% on March and 7% on the previous year. A total of 16,100 loans were approved, down by 64% compared to the previous month and 10% on April 2015.

Stamp Duty Deadline Causes Huge Drop in Buy-to-Let Borrowing

As of 1^st April, buy-to-let landlords and second homebuyers are charged an extra 3% in Stamp Duty on property purchases. This caused a rush of investors to flood the market in the first three months of the year.

Homeowners borrowed £8.1 billion for house purchase in April, down by 40% on the month and 4% annually. They took out 47,300 loans, down by 31% on March and 5% on April last year.

The report also found that first time buyers borrowed £3.9 billion, marking a decline of 11% month-on-month, but up by 15% on the year. This equated to 25,100 loans, down by 9% on March, but up by 7% yearly.

Those moving home borrowed £4.3 billion, down by a significant 53% on March and 14% compared to the previous year. This represented 22,200 loans, down by 46% monthly and 15% year-on-year.

Remortgage borrowing totalled £6 billion in April, up by 25% on March and 40% on April 2015. This came to 34,800 loans, up by 23% on the month and 30% on last year.

The Director of e.surv chartered surveyors, Richard Sexton, comments on the figures: “Concerns about a potential Brexit could account for a slight lending market slowdown, with May seeing house purchase loans total 65,113 – down 1.7% from April. Alongside this, lenders are adapting to much calmer market conditions after the rush of buy-to-let activity at the start of the year.

“Lending to first time buyers in particular has eased off slightly on a monthly basis, as a temporary caution enters the market. But lenders are committed to helping first timers get a foot on the property ladder in the long run. Since last year, significant effort has been made to support first timers through a variety of flexible mortgage deals offering low rates and even enabling family support.”

Sexton adds: “Buy-to-let borrowing may also be taking a breather, but the lending market remains buoyant. A remortgaging rush shows no sign of slowing as we approach summer, with homeowners taking advantage of more mortgage options, rising wages and a static interest rate. All this activity suggests that the next couple of months will see an increasingly resilient and balanced lending environment.”

Mortgage Lending Drops to 12-Month Low Ahead of EU Referendum

Published On: June 9, 2016 at 8:43 am

Author: Em Morley

Categories: Finance News

Tags: EU referendum,first time buyers,Mortgage lending,mortgages,property sales

A further decline in mortgage lending in May, ahead of this month’s EU referendum, marks as 12-month low in house purchase lending, according to the latest Mortgage Monitor from e.surv chartered surveyors.

Some 65,113 mortgages were approved in May, down by 1.7% from 66,250 the previous month. This is the lowest monthly figure since May last year and marks a 12-month low in lending levels.

The decrease follows monthly falls recorded in April, of 5.8%, and March, of 3%, meaning lending has dropped by 10.5% over the past three months, as political uncertainty ahead of the EU referendum causes caution amongst lenders and borrowers.

The recent declines highlight a sharp reversal of the record lending levels seen at the start of the year. January and February both recorded strong levels of mortgage approvals, at 73,060 and 72,512 respectively, as buy-to-let landlords and second homebuyers rushed to complete on property purchases ahead of the introduction of the 3% Stamp Duty surcharge on 1^st April.

Mortgage Lending Drops to 12-Month Low Ahead of EU Referendum

Now, the lending market appears to be settling back into its usual rhythm. However, e.surv also reports that on an annual basis, mortgage lending rose slightly in May, by 0.8%.

Despite this, the proportion of small-deposit lending dropped marginally in May, accounting for 18.4% of total home lending – down from 19.1% the previous month. Meanwhile, lending to large-deposit buyers (those with a deposit of 60% or more), picked up significantly, making up around a third (30.7%) of all lending.

The Director of e.surv, Richard Sexton, comments on the data: “Lenders may need to navigate choppier waters over the next couple of months, but for now, the mortgage market remains on an even keel. Homebuyers have more options than ever, as lenders work to expand their range of mortgage options further. New mortgages with longer repayment terms and innovative intergenerational mortgages are offering financial buoyancy aids for buyers.

“But the EU referendum is causing some nervousness within financial circles and bringing new unknowns with it. This political milestone could impact the UK’s economic outlook, and slowing growth could pose problems of its own for both lenders and borrowers. Juggling these challenges will be key to maintaining the current health of the mortgage market, and lenders should brace themselves for possible surprises.”

He continues: “Faced with this uncertainty, it’s perhaps no surprise that home lending levels are falling slightly. The result is a slight tail-off mid-year, as homebuyers pause for thought and lenders are gifted more time to investigate the potential of offering additional mortgage choices. A lull in buy-to-let lending following April’s Stamp Duty changes has also added to this calming in the market.”

Although a drop in the proportion of small-deposit lending was recorded, the latest First Time Buyer Tracker from estate agents Your Move and Reeds Rains found that first time buyer transactions hit a two-year high in April, with 32,300 completions. This was a huge 14.9% higher on a monthly basis.

Meanwhile, large-deposit lending rose slightly annually, from 28.2% in May last year to 30.7% this year.

Sexton states: “First time buyers may be feeling more positive as new mortgage options flood the market, but more still needs to be done to ensure small-deposit lending stays a priority. Given the demands of saving for a deposit, high loan-to-value (LTV) lending continues to be crucial to helping aspiring buyers onto the ladder. Low inflation and rising wages can only do so much to combat climbing deposit demands. Meanwhile, some first time buyer schemes, like Help to Buy 2, are due to be phased out at the end of the year. This could curb first time activity if it means the improvements made to support first timers start to fall away.

“Competition for properties has been temporarily eased by the Government’s interventions in the private rental sector, which means first timers aren’t having to fight for properties with landlords in the same way that they were. But managing demand isn’t a sustainable way to control the property market over the long-term.”

He concludes: “The real solution is to solve the supply shortfall haunting the property market. There’s always talk about new homes, but across the country, homebuyers – especially first timers – need action not words. An increase in available homes would help affordability and inject a new energy into the property market, relieving some of the pressure on prospective homebuyers. Without an injection of supply, property prices and deposit requirements will continue to climb, leaving the market even more reliant on the high-LTV sector.”

Housing Crisis Causing Many to Put off Major Life Decisions

Published On: June 7, 2016 at 8:34 am

Author: Em Morley

Categories: Property News

Tags: first time buyers,house prices,housing crisis,rent prices,starter homes

Britain’s housing crisis is causing many people under 45-years-old to put off major life decisions, according to a new study by YouGov on behalf of homelessness charity Shelter.

Shelter reveals that 59% of people in that age group have put significant milestones, such as marriage, starting a family or moving for work, on hold. The research indicates how the housing crisis is affecting much more than just where people live.

Housing Crisis Causing Many to Put off Major Life Decisions

Over the past few years, house prices have continued to rise, with the average property value in London surpassing £600,000 for the first time last month.

Data from recent months also shows that rent prices have been increasing constantly since 2010, putting even further pressure on prospective first time buyers saving for a deposit.

Research has found that as a result of the chronic housing shortage, the average age of a first time buyer is now 38. This is expected to rise to 41 by 2025, according to financial services firm London Victoria.

However, the lack of affordable housing is also increasingly having an impact on personal lives.

The YouGov survey found that 19% of people under 45 have experienced a delay finding a job, while 16% have postponed getting married. Some 22% of respondents have put off having children because of their housing situation, while one in ten expect to delay their retirement from work.

The Government’s Starter Homes scheme was designed to boost homeownership. However, the initiative has been criticised, as the houses are still too expensive for most people on ordinary incomes.

The Chief Executive of Shelter, Campbell Robb, believes that young people have been left in limbo due to the shortage of affordable homes.

He says: “Everyone deserves the chance to have a home where they can put down roots and build a life for themselves. But our ever-growing housing crisis means millions of young people are being left behind – unable to reach many of the crucial life milestones that were taken for granted by the generations who came before them.

“As Shelter reaches its 50^th year, it’s heart-breaking to see so many young people still living in a housing limbo, facing a frustrating lifetime of instability where they feel unable to move forward with their lives.”

He insists: “We cannot make this crisis someone else’s problem, and it’s the responsibility of all of us to help fix it.”

Number of First Time Buyers at Two-Year High

Published On: May 27, 2016 at 11:35 am

Author: Em Morley

Categories: Property News

Tags: first time buyers,house prices,housing,property market

The number of first time buyers in the UK property market has climbed to a two-year high, according to the latest First Time Buyer Tracker from Your Move and Reeds Rains estate agents.

Last month, 32,300 first time buyer transactions were recorded, up by 14.9% on March’s 28,100 and a huge 50.9% higher than the 21,400 seen in January. These figures arrive as the 1^st April Stamp Duty deadline for buy-to-let landlords and second homebuyers passes, meaning that much of the competition for smaller properties has subsided.

The significant sales surge in April means that the monthly number of completed first time buyer transactions was the highest in around two years, with sales surpassing totals from the last 22 months, since the 33,300 total reached in June 2014.

Compared to last year, completed first time buyer sales have soared by 37.4%. In April 2015, just 23,500 first time buyers completed on property transactions, meaning 8,800 more first time buyers got onto the housing ladder this year than last – an encouraging signal to aspiring first time buyers.

The Director of Your Move and Reeds Rains, Adrian Gill, says: “This surge in sales shows that demand is steadfast among first time buyers, despite upward movement in house prices. In the short-term, first timers may be finding that competition for properties has eased slightly following a period of intense pressure on landlords to meet the Stamp Duty surcharge deadline at the beginning of April. With a chronic shortage of homes, one man’s loss is another man’s gain. Subdued landlord demand following the changes is offering some temporary light relief to first time buyers. Less competition from landlords expanding their portfolios means more houses to buy for first timers.

“Scratch beneath the surface of these positive monthly figures and a darker long-term picture emerges. The Government’s restrictions on the buy-to-let sector may seem to play into the hands of today’s first time buyers, but future first timers could pay the price.”

Number of First Time Buyers at Two-Year High

He continues: “Demand for first time properties to buy remains red hot, but demand for cheap properties to rent is also searing – fuelled by a swelling population and increasing desire among many to move around the country following career opportunities. Cutting landlords out of the equation will simply drive this demand harder still, pushing up rents and making saving for a deposit for a first home more difficult. First time buyers are tenants too.”

In the past 12 months, the average first time buyer spent over £20,000 more to purchase their own home. In April, the typical first time buyer property cost £168,656 – 13.6% higher than the £148,483 they spent in April 2015.

As a result, the average first time buyer deposit has also risen significantly over the past year.

Currently, the typical first time buyer deposit is £27,290 – 13.8%, or £3,300, more than the £23,990 paid last April.

However, in a sign of continued competition in the lending market and strong financial support for first time buyers, the average mortgage rate has dropped by 0.45 percentage points in the last 12 months, now standing at 3.10% – the lowest average mortgage rate on record for first time buyers.

The latest Mortgage Monitor from e.surv provides further evidence of this trend, showing that small-deposit lending accounted for 19.1% of house purchase approvals in April, compared to 16.3% last year.

Gill comments: “House price growth continues to be the thorn in the side for many first time buyers. Even as lenders compete to attract first time buyer business by lowering rates to record lows, mortgage repayments and deposits are getting more expensive due to house prices lifting at the lower end of the market. This is a supply issue. Any efforts to increase housebuilding and stimulate supply will take time. There is no magic wand solution to the first time buyer housing crunch.

“Wider economic woes may also be playing a part. Recently, to some extent, improved wages have helped alleviate the pain of rising house prices. But with growth slipping and the uncertainty around the EU referendum slowing down the economy, higher wages are no longer the salve they were. Thankfully, lower rates and improved availability of financial support to first timers mean mortgage repayments remain affordable against all the odds.”

London continues to be the most expensive place to buy a home, with first time buyers paying an average £322,613 in the three months to April. The second most expensive region is the South East, where the typical first time buyer property costs £215,444. In every other region of the UK, first time buyer prices drop below the £200,000 mark.

Northern Ireland is the cheapest region in the UK to purchase a first home, with an average price of £99,860 – the only region where first time buyers pay less than £100,000.

Despite its high prices, the South East is home to the greatest number of first time buyers, with 16,300 purchasing a property in this region in the three months to April. London saw the next highest level of activity, with 11,300 sales.

Gill concludes: “London continues to be a hotbed of first time buyer activity, as young professionals flood to the capital for work. But sellers in the surrounding regions, like the South East and East Anglia, are being boosted by buyers priced out of the capital and looking to buy a home in a cheaper region. Towns like Maidenhead and Reading have seen stellar demand as commuter towns with bright local economies and cheaper houses than the capital. Sellers in these regions can turn a tidy profit by capitalising on this trend.

“New career hotspots are also vying to steal the capital’s crown. In the West Midlands, Birmingham continues to attract growing numbers of young professionals, while in the North West, Manchester is also a thriving hub. For the moment, London remains the beating heart of the UK property market, but as high prices force first timers further afield, the rest of the country is benefitting from this migration and other cities may soon take the lead.”

Housing demand falls during April

Published On: May 26, 2016 at 10:47 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,first time buyers,house hunters,Stamp Duty

New research from the National Association of Estate Agents has discovered that estate agents reported a substantial drop in housing demand during April.

The number of house-hunters registered per member branch actually fell to the lowest levels seen by the firm since March 2014.

Housing demand drop

According to the report, 325 would-be homeowners were registered per member branch during April. Demand has dropped by 22% in comparison to March, where 417 members were registered.

In addition, the supply of houses available for potential buyers also fell significantly, by 35%. This was a fall of 54 properties available to just 35.

Of the total number of sales made in April, 26% were made to first-time buyers, a fall of 2% from March. This said, 33% of estate agents expect sales to this group to rise in the wake of the stamp duty changes affecting the buy-to-let market. In turn, less buy-to-let landlords are thought to have interest, freeing up properties for first-time purchasers.

Housing demand falls during April

Brexit fears

24% of estate agents said that they expect property prices to fall, with 23% expecting demand to decrease should Britain vote to leave the European Union.

Mark Hayward, managing director of the National Association of Estate Agents, noted, ‘it’s no surprise that demand dropped significantly in April. 80% of agents saw an increase in purchasers trying to beat the buy-to-let stamp duty changes before the April 1^st deadline, so we expected to see a slow-down immediately following the deadline. Whilst the number of house-hunters registered per branch dropped in April, the supply of available housing to buy also fell quite sharply, so supply and demand are still moving in the opposite direction, rather than balancing out.’[1]

‘Additionally, the upcoming EU Referendum means we’ve entered a period of uncertainty, as buyers put off their hunt in anticipation of the result and what might happen to prices as a result,’ Mr Hayward added.[1]

[1] http://www.propertyreporter.co.uk/property/house-hunters-at-lowest-levels-for-2-years.html