Property inflation forecasts give hope to first-time buyers

Firstrung, the firm that specialises in providing mortgages for first-time buyers, is confident that property price inflation will not be an issue for the next generation of first-time buyers.

Paul Holmes, chief executive of Firstrung, is forecasting is that house prices will correct by 1% a month over the next three years, giving a 35% fall in values by the beginning of 2012.

He expects to see ups and downs in the market but believes that in the long-run, first-time buyers will see prices decrease.

According to Firstrung data, those making a start on the property ladder have been faced with an average £19,000 increase in the price of properties over the past year and only last month, Halifax reported that in 96% of UK towns the average house price is unaffordable for first-time buyers.

The cost of a deposit on a first property has increased by 88% since 2002, giving an average figure of £34,381.

In addition, Lombard Street Research’s latest quarterly report on UK house prices show affordability at its worse position since 1991.

During the second quarter of 1991, UK house prices were falling at an annual rate of 6% and Lombard is forecasting that in 2008, house prices will start falling on an annual basis at rates of between 3% and 4%.

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