Posts with tag: first time buyers

Lending to borrowers with small deposits rises

Published On: May 14, 2015 at 3:38 pm

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Recent lending figures have given further encouragement to first-time buyers, suggesting that the increase of competitive rates and higher accessibility is working.

Increase

Data from the survey by e.surv chartered surveyors indicates that there has been an increase in mortgages granted to borrowers with smaller deposits. Loans to lenders with small deposits showed a year-on-year increase to April of 7.3%. Month on month, deposits were also up by 6.4%.[1]

Despite this increase, the number of property purchase approvals fell year on year. In the total market, approvals for lending fell by 1.9% from 63,236 loans in April 2014 to 62,035 in 2015. [1]

These figures seem to suggest that higher loan to value (LTV) lending is assisting in supporting total mortgage approval figures. As a percentage, higher LTV lending stands at 16.3%, in comparison to 14.9% in April last year.[1]

Revival

Richard Sexton, director of e.surv. believes that the, ‘revival of the bottom of the market is becoming ever more crucial and this showed in the recent election struggle, with all the main parties placing helping first-time buyers as one of the crucial components of their campaigns.’[1]

Lending to borrowers with small deposits rises

Lending to borrowers with small deposits rises

Sexton stated that before worries are expressed due to the increase in larger LTV lending, the statistics must be placed in context. ‘The number of higher LTV house purchases approvals is still only a quarter of what it was in 2007, he explained.’ Sexton believes that this is a, ‘healthy upturn,’ as opposed to a sign of any, ‘malady’ in the market.[1]

Mr Sexton went on to say, ‘Prime Minister David Cameron has outlined a plan to provide 200,000 cut price starter homes, alongside a commitment to unlocking brownfield land for building new homes. This is the kind of clear planning the property market needs and it is to be hoped that the proposals crystallise into real policies.’[1]

Growth

Figures from the same survey also suggests that overall house purchase approvals also rose, by 1.1% from March. Sexton points out that following the initial mortgage reforms one year ago, there were five straight months of drops in approvals. He believes that, ‘we turned a corner at the start of this year and lending is starting to find its feet again in the new regulatory landscape.’ He also feels that, ‘this should be even more of a spur to the government to push forward their plans for home building as a continual demand for home ownership places ever more pressure on Britain’s insufficient stuck of homes.’[1]

[1] http://www.propertywire.com/news/europe/uk-home-lending-data-2015051410506.html

 

 

Average First Time Buyer Home in London is £300,000

Published On: May 11, 2015 at 11:30 am

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Categories: Finance News

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The average price paid for a property by a first time buyer in London has exceeded £300,000 for the first time.

In the rest of the UK, the average price for the same buyer is just £155,782.

First time buyers in the capital must also raise a deposit of over £67,000, compared with £25,890 elsewhere.

Average First Time Buyer Home in London is £300,000

Average First Time Buyer Home in London is £300,000

Data from Your Move and Reeds Rains indicates that although the average starter home in London is now £304,205, around 9,100 first time buyers purchased a home in the capital in the first quarter (Q1) of 2015.

This figure was 11,700 in Q1 2014, but the average starter home was £266,497 then. However, the amount of first time buyers is likely to grow again, as high-end buyers tail off.

The latest House Price Index from Land Registry reveals that property prices in the capital are beginning to steady, at a slight 0.2% rise in the last month.

However, this will not help aspiring buyers, who saw a huge increase last year, meaning the annual price rise is 11.3% and the average house price is £462,700. This is two and a half times the average value in England and Wales of £178,007.

London’s resilient prices mean that outer areas, which offer better value for money, are benefitting from more buyers. More expensive boroughs of the capital are barely seeing rises above inflation.

The best performing areas of the capital in the last year were Newham, up 19% to an average of £291,364, and Greenwich, up 18.8% to £353,926.

The worst area was Kensington and Chelsea, where average prices increased 5.2% to just under £1.3m.

The borough saw the highest property price growth during the coalition government, at just under 48% in five years. Two other Conservative areas, the City of London and the City of Westminster, experienced increases of over 40% in the same period.

Just three Labour constituencies were in the top ten property price performers, Tooting and Islington North, both up 38.2%, and Tottenham at 35.7%.

The only places surpassing London’s rises are the commutable and fairly inexpensive areas of Thurrock, Hertfordshire and Reading, which have all experienced increases of 13%.

 

Property Market is Strong Despite Election

Published On: May 7, 2015 at 11:29 am

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Activity in the UK’s property market was stronger in every sector last month than a year previously, despite uncertainty surrounding the general election.

Research from Connells Survey and Valuation indicates that there were 13% more property valuations in April than a year before, although April’s total dropped by 32% compared with March 2015.

The company’s Corporate Services Director, John Bagshaw, says that for all areas, from first time buyers to remortgages, valuations are up compared to last year. He states that this proves the housing market has momentum and he predicts this will continue into the new Parliament.

However, Bagshaw also notes that there could be an unclear election result from today’s poll, which will affect confidence.

Property Market is Strong Despite Election

Property Market is Strong Despite Election

“The latest monthly dip from March is generally a seasonal effect at this time of year so if this monthly slowdown continues further we’ll know that something has changed more fundamentally. Yet so far, there is no sign of a serious housing market slowdown.”

The study also found that in April, remortgaging surpassed the overall property market with a 25% increase on April 2014, overcoming a 34% drop from March 2015.

Bagshaw thinks that the outperformance of remortgaging is down to record low mortgage rates, which are expected to stay down for the near future: “Inflation is at zero and there’s little sign that the Bank of England [BoE] will need to raise the base rate imminently. In the meantime, mortgage rates have plummeted to the lowest level in over four years.

“Thus, many households may be capitalising on this period by refinancing to a fixed mortgage.”

The buy-to-let sector has seen the greatest month-on-month drop compared to other areas of the market, falling by 36% in April. However, it has grown the most since April 2014, up 29%.

Bagshaw explains that this could be due to rent control and three-year tenancy plans: “Some would-be landlords are perhaps waiting to see whether and how these policies will be implemented before looking to invest further. Yet the long-term picture is extremely positive.

“Over the past year, landlords have benefitted from a booming jobs market, which has led more people to move within commuting distance of work, thus increasing demand for rental properties in certain hot spots.

“Equally, as real term wages pick up there has been an increase in the rental prices tenants are willing to pay.”

Activity from first time buyers has slowed, with valuations for these buyers falling 33% since March. Since April 2014, first time buyer activity has grown just 7%.

Furthermore, activity by homeowners already on the property ladder was minimal. Valuations for established homeowners fell 27% compared with March, increasing by only 3% in the past year.

Bagshaw adds: “First time buyers have had bundles of extra support over the last five years, but still not quite enough to power any serious growth in the number stepping onto the property ladder for the first time. This might disappoint some, especially with the plethora of Government schemes to boost first timers.

“Yet the greatest squeeze has been among those who already own their home who simply aren’t looking to upsize in the same way as might have been the case a decade ago.

“Householders might have said goodbye to the recession years ago, but the crunch on disposable incomes and aspiration to move to a bigger home might well last a decade.”1

1 http://www.propertywire.com/news/europe/uk-housing-market-activity-2015050710479.html

 

Average First Time Buyer Must Earn £41,000

Published On: May 6, 2015 at 4:05 pm

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The average first time buyer needs to earn at least £41,000 before they can get a mortgage. This is almost double the average wage in the UK of £22,000.

KPMG released a report this week that revealed the difference between property prices and salaries has widened so much that all aspiring buyers have affordability problems, unless they have a very high wage or inherit money.

First time buyers in London have the hardest struggle getting on the housing ladder. They must earn a huge £77,000 to buy their first home, but the average worker earns just £28,000.

These numbers are based on having a 10% deposit with the remaining 90% at 4.5 times the annual income, which varies massively around the country.

The smallest gap is in Northern Ireland, with the actual average wage at £18,857, compared to the £21,219 needed. The narrowest gap in England is in the North East, with actual earnings at £20,149 to the £23,616 required.

Head of Housing at KPMG, Jan Crosby says: “These figures make for frightening reading and show that housing affordability is no longer just a problem for lower wage earners.

“Now unless you earn well above average or receive inheritance, it is unlikely you will be able to afford to buy, no matter where in the UK you live.”1 

Average First Time Buyer Must Earn £41,000

Average First Time Buyer Must Earn £41,000

What first time buyers need around the country1

Region

 Average house price for first time buyers Current median annual wage of first time buyers

Required average annual wage of first time buyers
UK £202,765 £22,044 £40,553
London £384,856 £27,999 £76,971
South East £230,049 £24,391 £46,010
South West £179,204 £20,690 £35,841
East Midlands £136,366 £20,890 £27,273
East of England £180,331 £23,271 £40,074
West Midlands £145,394 £20,431 £29,079
North East £118,081 £20,149 £23,616
North West £131,977 £20,723 £26,395
Yorkshire and Humberside £132,143 £20,223 £26,429
Wales £129,546 £20,021 £25,909
Scotland £133,938 £21,770 £26,788
Northern Ireland £106,094 £18,857 £21,219

1 http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11584347/Average-first-time-buyer-needs-41000-salary.html

Number of First Time Buyers Drops

Published On: May 6, 2015 at 12:31 pm

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Categories: Landlord News

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Young people are still struggling to buy a home as the amount of first time buyers dropped in the past year.

The National Association of Estate Agents (NAEA) found that just one fifth of residential property sales in March were to first time buyers, compared with a quarter in March 2014.

Research found that only 22% of homes were bought by this group, the lowest figure since July 2014. Experts expect that things could get worse for aspiring buyers, as there is a shortage of available homes and prices are still increasing faster than wages.

Property prices in England and Wales have risen by 5% in the past year; surpassing wage increases at 1.8%, found Land Registry.1

Price increases vary around the country; with London experiencing annual rises of 11% and the North East seeing a fall of 3%.

The NAEA’s Mark Hayward says: “Affordability is still a big concern. People’s incomes are not rising as fast as house prices and a lack of supply is driving prices up further. It could get worse for first time buyers.

“We have not yet seen the effect of the pension reforms, which could see people cashing in their pensions and rushing to invest in property, increasing the competition.”1

The Mortgage Market Review, introduced last April, brought in stricter affordability rules for buyers. It is believed that this contributed to the fall in numbers. Lenders are now required to conduct thorough checks on borrowers’ incomes and spending habits.

One of Britain’s leading academics says that the country must build more homes and challenge opposition from locals for the sake of “our children”.

Number of First Time Buyers Drops

Number of First Time Buyers Drops

Dame Kate Barker, former Bank of England (BoE) policymaker, has called for radical reforms to avoid a major housing crisis and help young people to buy a property. She would also like to see more public land made available for housing by tackling complaining locals if their arguments have “no substance”.

At a lecture by the Cambridge University Land Society, Dame Kate said: “The housing system today is unfairly weighted towards those already owning a home, or lucky enough to inherit funds from property ownership.

“Existing homeowners should recognise the stark truth that if they insist on keeping new development away from them, and on keeping all the profits from higher prices, we will not be able to house our children in a fair manner, and in some cases perhaps they will not be housed at all.

“The next government needs to act radically and coherently.”

She said that the general election housing manifestos are not “fully convincing” and that politicians are not brave enough to take bolder action by naming areas that need development, in case they become “unpopular”.1 

The Conservatives have promised 200,000 starter homes for first time buyers by 2020 and Labour will abolish Stamp Duty for first time buyers on homes less than £300,000.

The Centre for Economic Performance (CEP), part of the London School of Economics, resonated Dame Kate’s concerns, stating that Britain’s planning system lets Nimbies – local opponents – “employ endless ways to block new developments.”1

Academics at the CEP said that property prices have risen faster in the UK than almost any developed nation in the past 40 years. The prices of homes in central London per square mile are more expensive than New York, Paris and Geneva.

The CEP’s Christian Hilber says that Government schemes like Help to Buy have driven up demand and pushed up prices rather than helping the supply problem.

He says: “These policies may thus be an ineffective waste of taxpayer money at best, and counterproductive at worst.”

He also finds that places with the worst housing issues, in London and the South East, generally have stricter planning restrictions. It is often easier to gain planning permission in the north as unemployment levels are higher and developments could bring jobs.

Hilber continues: “If the South East, the most tightly regulated English region, had the regulatory restrictiveness of the North East of England, house prices in the South East would have been roughly 30% lower in 2015.”

He also says that planning laws should be changed to “allow developers to compensate Nimbies in an attempt to gain planning permission.”1 

Estimations suggest a decline of 20,000 first time buyers between the first quarter (Q1) of 2015 and Q4 2014. Your Move expected the amount of sales to first time buyers in Q1 2015 to be around 61,000, the lowest quarter for two years.

It says: “A lack of new homes is catching up with the property market.”1

Housing charity Shelter’s Chief Executive, Campbell Robb, says: “Yet again, we see in black and white the huge hurdles aspiring homeowners are facing thanks to our housing shortage.

“There might be talk of a cooling market, but the millions of people saving hard for a stable future will know a very different reality: their dream of a home has jumped another £9,000 out of reach.”1

1 http://www.dailymail.co.uk/news/article-3063372/Fresh-housing-gloom-time-buyers-one-five-house-sales-people-buying-property-12-months.html

 

Election uncertainty slowing property demand

Published On: May 5, 2015 at 11:46 am

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Categories: Property News

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The latest monthly figures from estate agents seems to suggest that property hunters throughout the U.K are holding out for the result of Thursday’s general election before pressing on with their search.

Demand

A report from the National Association of Estate Agents (NAEA) revealed that 63% of its members believe that demand for property is at its lowest point since last year. 343 would-be buyers are currently registered on average per NAEA branch, as opposed to 406 in September 2014.[1]

Findings from the report also indicated that only 22% of house sales in March were made to first-time purchasers. This represented the lowest figure since July 2014, and was also down by a substantial 30% on February.[2]

Election indecision

There is also concern amongst NAEA members that demand is continuing to far exceed supply for first-time buyers. Housing policy is one of the biggest election battles, with the report showing that 48% of NAEA agents back the Tories’ pledge to build 200,000 purpose starter homes. However, just 6% support Labour’s promise to increase house-building numbers to 200,00 per year by 2020. [3]

31% do not think that any of the policies put forwards will be sufficient in solving the housing problem.[4]

Mark Hayward, NAEA managing director, said that, ‘an event as monumental as a general election,’ would always have, ‘an impact on the property market.’ However, Hayward believes that, ‘what makes this election so interesting is that no one knows what the result will be.’[5]

Hayward thinks that, ‘with housing featuring so prominently in all three main parties’ manifestos, buyers in particular are holding off to see what will happen.’ He went on to state that the, ‘outcome of the election will impact first, second, third and last-time buyers.’[6]

Election uncertainty slowing property demand

Election uncertainty slowing property demand

Rise

Interestingly, while demand was down to 343 house hunters per branch during March, supply went up on average from 43 to 48 homes. This is due to houses staying on the market for an increased period, due to nervous property hunters.

With demand far exceeding supply, a slight fall in demand will not affect overall sales. In fact, March saw an increase of the average amount of sales secured per branch, with ten sales as opposed to eight in February.[7]

Mr Hayward commented that despite the slight increase in supply during March, ‘it is not an ongoing trend or a big enough jump to fill the gap for demand.’[8]

Not enough

Despite saying that it is, ‘encouraging to see all parties actively proposing plans to regulate supply and demand,’ Hayward believes that, ‘the policies in place are unlikely to be enough to rectify the crippling situation we’re in.’ Explaining his comments, Hayward said that, ‘it’s all very well proposing to build 200,000 houses, but planning law, lack of infrastructure and available labour can make this process so lengthy that it may be ten or twenty years until we see this, by which time demand will be greater.’[9]

Hayward concluded by saying that the market will rise again at a, ‘rapid rate,’ following the election, and stressed that it is, ‘more important than ever that the party elected focuses on increasing the supply of homes.’[10]

 

[1-10] http://www.propertywire.com/news/europe/estate-agents-buyer-concerns-2015050110458.html