Posts with tag: first time buyers

First time buyer house prices increase in June

Published On: July 28, 2015 at 9:51 am

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New research has indicated that the average price of a first-time buyer home rose by over £4,150 in the last month.

A report from Haart shows that homes grew in value by £138 every day in the past month and by £12,000 over the last year.[1]

Rises

Data compiled by Haart shows that the average UK property price is now £216,951. This represents a 6.1% rise over the year and 2.6% on the month and is a new high, continuing the upward spiral of prices since November.[1]

For first-time buyers, the average price of a home saw a larger increase of 7.5%. Starter homes also grew in value by 2.6% in June to stand at £166,393. The total number of first-time buyers however was down 13.6% annually.[1]

Additionally, first-time buyers made up 42.7% of all mortgages taken out in June, down from the 44.4% a year earlier. This data suggests buyers are still finding it difficult to get a substantial foothold in the market. What’s more, the average first-time buyer mortgage was up 3% in June and 8.7% in the year.[1]

New buyers registering increased slightly by 0.5% but supply was found to be lacking, down by 0.7% monthly and by a substantial 13.9% annually.[1]

First time buyer house prices increase in June

First time buyer house prices increase in June

Changing reality

Paul Smith, CEO of Haart acknowledged, ‘first-time buyer house prices climbed £4,150 in a single month or £138 every day in June. A potential first-time buyer on an average salary of £27,000 must be prepared to spend 42% of their take home salary on mortgage repayments, showing the traditional rule of spending no more than 30% of income on housing is no longer reality for many.’[1]

Smith said that, ‘as a result, we’ve seen a knock-on effect on first-time buyer registrations which are down 13.6% annually. The only solution to this is to unlock the market and free up supply.’ He went on to suggest that, ‘efficient use of space is a must and we need to dispel fears that downsizing indicates older homes have lost their zest for life. Movement in the upper echelons of the market will free up stock at all levels and put the brakes slightly on property price growth.’[1]

‘There are currently 11 buyers chasing every new property to come onto the market in the UK, and in London the figure is nearly double at 20:1. However, the Government’s recent announcement in the emergency Budget that the inheritance tax threshold is to be raised to £1million and that an ‘inheritance tax credit’ will be implemented, should encourage those with larger, more expensive homes to downsize. This should have a trickle-down effect and boost the supply of starter homes at the lower end of the market, helping first-time buyers,’ Smith concluded. [1]

[1] http://www.propertyreporter.co.uk/property/ftb-house-prices-increase-by-4150-in-june.html

 

 

Average Price of Affordable Home is Around £190,000

Published On: July 27, 2015 at 3:58 pm

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The average price paid for a home under an affordable housing scheme has hit around £190,000, according to research by the Halifax.

The average price of £189,786 is just 4%, or £7,750, lower than the average of £197,535 for house purchases as a whole.

Regionally, the highest average price paid by a buyer using an affordable housing scheme is in London, at £323,148. The lowest average price, of £147,437, is in the North of England.

Average Price of Affordable Home is Around £190,000

Average Price of Affordable Home is Around £190,000

However, the average price of a property sold in the capital under one of these schemes is 33% lower than the overall London price of £482,579.

The study also reveals that first time buyers benefit the most from affordable housing schemes, accounting for 80% of Help to Buy purchases, compared with just 46% of all mortgage-financed property purchases made by first time buyers over the same period.

In the past 12 months, economic recovery and Government schemes, such as Help to Buy, have aided the highest number of first time buyers to purchase a home for seven years.

Recent official data shows that Help to Buy equity loans and mortgage guarantee schemes and NewBuy have helped 99,601 buyers purchase a home since Help to Buy was launched in the 2013 Budget.

First time buyers made four out of five, or 79,680, of these purchases.

The average price paid by first time buyers using these schemes is £150,361, around 10%, or £16,732, lower than the average price paid generally by first time buyers, at £167,093.

First time buyers in London experience the greatest benefits from affordable housing schemes, with an average price of £236,733, which is 36% lower than the average price paid by a first time buyer generally, at £367,961.

Mortgages Director at the Halifax, Craig McKinlay, says: “Many of the affordable homeownership schemes available have been designed specifically to help first time buyers get on the ladder and support construction of new build homes and the latest official figures show this has been successful.

“As the economy continues to recover and mortgage interest rates remain at very low levels, we expect to see continued growth in first time buyers during the second half of the year.”1

The research also analysed the profiles of borrowers buying a home under affordable housing schemes, to determine typical users. It discovered that 17% of affordable housing transactions in the 12 months to May 2015 were in Scotland, followed by 15% in the South East and 10% in the North West.

Comparatively, 20% of all housing transactions were in the South East, 12% in Scotland and 10% in London.

The average annual income of a homebuyer using an affordable housing scheme is £31,886, 5% lower than the average earnings of all those in full time employment, of £33,475.

Regionally, the average earnings of buyers under these schemes ranges from £50,254 in London to £29,031 in the North West.

Affordable housing schemes have especially helped younger buyers, with 37% of all buyers using a scheme aged from 20-29, compared to just 25% of all home buyers.

1 http://www.propertywire.com/news/europe/uk-affordable-homes-research-2015072710791.html

The Difference in Age Range and Homeownership

Published On: July 23, 2015 at 4:58 pm

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With renting the most likely housing option for young people today, how common is homeownership amongst this generation and the older generation?

The Guardian has released an infographic that details changes in the market over many years.

Shockingly, the newspaper details the growth of house prices since 1980. In 35 years, the average property price has risen from just £24,000 to £267,000.

Considering that the average first time buyer deposit is now over £25,000, this highlights the increasingly difficult position they are in, compared to the previous generation.

However, the greatest increase in house prices came in 1988, a rise of 23%.

But this didn’t halt buyers as much as in the period between 2006-09, when house sales dropped by a huge 48.5%, showing the real impact of the financial crisis on the housing market.

Looking at the age divide in homeownership, the results are equally as staggering.

In 1991, more people in the 25-34 age group owned a home than those aged over-65, at 67% to 62%.

By 2011-12, this had changed dramatically. Just 43% of 25-34-year-olds owned a home, compared to 79% of over-65s.

Considering assets, 24% of 25-34-year-olds have up to £50,000 in property wealth, compared to 1% of over-65s.

Those with property wealth of over £250,000 drops to 9% in the 25-34 age range, but up to 30% in over-65s.

A huge 60% of over-65s own their home outright, compared to a minute 1% of 25-34-year-olds.

Over Half of Under-40s Will Live in PRS Within a Decade

Published On: July 23, 2015 at 10:59 am

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Over half of those under 40-years-old will live in the private rental sector by 2025, new research suggests.

Over Half of Under-40s Will Live in PRS Within a Decade

Over Half of Under-40s Will Live in PRS Within a Decade

The study, by accountancy firm PwC, also says that homeownership will fall to around 60% and the amount of households renting privately will increase to 7.2m in the same period.

PwC warns that the difficult housing situation faced by young people at present will worsen within five years.

Seb Klier, of tenant group Generation Rent, told Channel 4 News that there could be “radical action” ahead.1

He believes that angry protestors could go on rent strikes and forcefully oppose evictions.

PwC also predicts that house prices will rise at an average rate of 5% per year, making the average house price £360,000 by 2020.

First time buyers need a deposit of 18% of the property value, meaning that in 2020, they must save a deposit of £64,800.

PwC also cautions that the gap between the young and old will widen, as the young are unable to buy and many older homeowners will own their properties outright, because they have either paid in cash or paid off their mortgages.

The firm expects the number of homes owned outright to increase from 8.4m now to 10.6m in 2025, accounting for 35% of the total housing stock.

Senior Economist at PwC, Richard Snook, says: “Driven by a decade of soaring house prices before the financial crisis and lower loan-to-value ratios post-crisis, the deposits needed by first time buyers have risen significantly.

“As a result, a generation of private renters have emerged and this will increasingly be the norm for the 20-39 age group.”1

1 http://www.propertyindustryeye.com/over-half-of-under-40s-living-in-private-rented-homes-within-a-decade/

Around Half of Renters Don’t Expect to Get on the Property Ladder

Published On: July 22, 2015 at 3:01 pm

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Around half of renters in the UK (44%) believe that they will never get onto the property ladder, as saving for a deposit is too difficult.

Only 2% of private tenants plan to buy their first home this year, according to an independent study by construction and regeneration firm, Keepmoat.

Around Half of Renters Don't Expect to Get on the Property Ladder

Around Half of Renters Don’t Expect to Get on the Property Ladder

The average house price in England and Wales is now £178,000, according to Land Registry. However, there are significant regional differences. For example, the average price of a home in London is now £462,799.

Although properties in the North of England are typically more affordable, renters in Liverpool were most likely to say they never expect to own a home, at 62%. This is followed by 60% in both Newcastle and Glasgow and 41% in the capital.

The most common reason for not being able to get onto the property ladder is the inability to save a deposit, cited by 56% of respondents.

For those hoping to buy a home, the pressure of saving a deposit was the top concern, at 58%. In this group, 61% said they would be saving their own deposit.

Of the homeowners surveyed, 38% said it took between two and five years to save a deposit, but it took up to ten years for 13%.

The study also found that awareness of the Government’s Help to Buy scheme is low. This initiative helps first time buyers enter the property market. Under one in three prospective buyers said they will use the scheme and 38% said they don’t know what the scheme is.

Chief Executive of Keepmoat, Dave Sheridan, comments: “It’s clear that the amount of money first time buyers need to raise for a deposit continues to stop many from getting on the property ladder.

“However, we were surprised that the results show Londoners are more confident about owning a home than those in other cities, particularly in the North.

“There is plenty of assistance available for buyers in the form of the Help to Buy scheme and help is available when saving for a deposit with the Help to Buy ISA.”1

1 http://www.propertywire.com/news/europe/uk-would-be-buyers-2015071710762.html

How the Help to Buy ISA Will Work

Published On: July 18, 2015 at 11:11 am

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The Conservative Government is supportive of first time buyers and aims to help young people get onto the property ladder.

The Government has two plans to solve the country’s housing crisis:

  • Continue making buying and owning a home attractive.
  • Build more private homes.

If you buy a new build property under the Government’s Help to Buy scheme, the Government will give you a loan that is free of interest for the first five years, for up to 20% of the value of a home worth up to £600,000 in England.

How the Help to Buy ISA Will Work

How the Help to Buy ISA Will Work

Details of Help to Buy in Wales can be found here: http://helptobuywales.co.uk/how-it-works/?lang=en.

The Scottish Help to Buy scheme is explained here: http://www.gov.scot/Topics/Built-Environment/Housing/BuyingSelling/help-to-buy.

And Help to Buy in Northern Ireland is detailed here: http://www.nidirect.gov.uk/help-to-buy-mortgage-guarantee-scheme.

This video from the Mortgage Advice Bureau (MAB) explains how Help to Buy works: https://www.mortgageadvicebureau.com/helptobuyscheme.

However, the Government now has a new proposal, the Help to Buy ISA.

Prospective first time buyers can open an account with a building society or bank (it is yet to be announced which will take part) and if they save up to £200 a month, the Government will add to their savings by 25%.

It is believed that savers can use the Government initiative from 1st December 2015. However, it is worth saving now, as hopeful buyers can start off with £1,000.

The Government will provide the additional 25% per month to a maximum of £3,000. However, if two people are planning to buy together, they can have separate ISAs and therefore receive up to £6,000.

The ISA can also be used alongside other schemes such as Help to Buy and shared ownership, as long as it is the buyer’s first home. Therefore, buyers can get a 25% top up to their savings and also receive a loan of up to 20% that is free of interest for five years.

Many first time buyers are told that they must save tens of thousands of pounds, as this is the average deposit of this type of buyer. This is around 25% of the home’s value. However, most lenders will lend at 95% loan-to-value (LTV), so buyers will only need a fifth for a deposit.

If a buyer saves £100 per month for three years using the Government’s Help to Buy ISA, they will save £3,600 plus £900 from the Government. This buyer will have a deposit of £4,500 or £9,000 if they are saving as a couple.

With a £4,500 deposit, a buyer could purchase a house for £90,000. This doubles to £180,000 if there are two buyers.

There are just three regions with an average property price of under £125,000, but there will be one or two-bedroom homes available in these areas for this price.

If a couple saves this amount, they will have enough money for the average priced house in England and Wales, according to the Land Registry.

First time buyers in London typically spend around £300,000 on their first home and outside of London this is £150,000, revealed the Council of Mortgage Lenders (CML).

If saving £100 a month secures just a £4,500 or £9,000 deposit, buyers can still look in expensive areas, where they could use a shared ownership scheme. Homes can be bought in Bristol for £83,000 via shared ownership, £70,000 in Stevenage and £180,000 in London.