First Time Buyers pushed even further out of the property market

22nd July 2014

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First time buyers are being further priced out of the property market and those aged 18 to 30 represented just 3% of all house sales in June.

According to the National Association of Estate Agents (NAEA) Housing Market Report for June, this is the lowest percentage of young house buyers ever recorded by the organisation.

Overall it found that number of first time buyers dropped to 20%, down from 25% in May 2014, the lowest level recorded since May 2013.

Nearly 80% of NAEA member agents believe the recent move by the Bank of England governor, Mark Carney to put a cap on high-risk mortgages, which will see only 15% of new mortgages at 4.5 times a borrower’s income, will hit the number of first-time buyers and home owners looking to move.

Mark Hayward, managing director of the NAEA said: “Things are getting even tougher for first time buyers. Not only do you now need to stump up ridiculously large sums of money in terms of deposits and stamp duty to be able to get on the ladder, but new rules mean buyers will also have to prove they can easily afford repayments now and in the future. Alongside this, a scaling back of the governments Help-to-Buy scheme and the implementation of the Mortgage Market Review in April will also have a significantly negative impact on the first time buyer market.”

NAEA’s report however recorded an increase in the average number of properties available per NAEA member branch. Available properties increased to an average of 46 compared to 44 in May 2014. The number of properties available per member branch is still historically low, and has not reached above 50 per month since November 2013, and above 60 since May 2013.

The average number of house hunters registering with NAEA agents decreased slightly in June, from an average of 374 house hunters in May to 371 in June. However, NAEA member agents also reported a decrease in the average number of sales agreed per branch, down from 10 in May to nine in June.

Separate research from Halifax found that the number of first-time buyers in the first six months of 2014 reached their highest level since 2007.

The analysis found there were an estimated 144,500 first-time buyers in the first six months of 2014, an increase of 25% on the same period last year – and the highest total for the same six month period since 2007, when the number hit 181,50.

Figures from the Office for National Statistics (ONS) show that house prices rose 0.8% month-on-month in May following a jump of 2.0% month-on-month in April. As a result the year-on-year increase in house prices climbed to 10.5% in May from 9.9% in April and 8.0% in March, taking it to its highest level May 2010. Worryingly annual house price inflation in London strengthened further to 20.1% in May from 18.7% in April.

1 thought on “First Time Buyers pushed even further out of the property market”

  1. Noo 2 Economics says:

    “Things are getting even tougher for first time buyers. Not only do you
    now need to stump up ridiculously large sums of money in terms of
    deposits and stamp duty to be able to get on the ladder, but new rules
    mean buyers will also have to prove they can easily afford repayments
    now and in the future.”

    I remember back in ’87 when I was a first time buyer being required to stump up 35% of the property price as a deposit (equivalent to 1.4 years salary!) and paying 8% interest on my loan which then proceeded to increase to 15% over the next 2 years representing an 80% increase in my monthly payments and resulted in 100,000 people a year at that time being repossessed and made homeless (I was one of the lucky ones, I held on to my house by the skin of my teeth!!). When viewed in perspective of the realities of those days the current requirements can hardly be seen as onerous….

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