Rics offers bleak picture of 2008 property market
A study from the Royal Institution of Chartered Surveyors (Rics) paints a gloomy picture for first-time buyers and the overall 2008 housing market.
In its latest affordability index, the Rics suggest that it can now cost 351% more to buy a home than in 1996.
According to the Institution, a couple on lower quartile earnings of £26,595 after tax now have to find up to £27,729 (the equivalent of 104% of joint net salary) to meet the up-front costs of buying a typical home.
The same couple could also face spending 40.3% of their combined net wage on mortgage repayments.
Rics senior economist, David Stubbs, says: “At the start of 2008, first-time buyers are finding it even harder to get a foothold on the housing ladder and the signs are that conditions are unlikely to get better in the short-term. Mortgage lenders are demanding ever higher deposits as the credit crunch continues to take effect.”
For those new to property ownership, the cost of buying a home has been adversely affected by a reduction in loan-to-value ratios, as a result of the credit squeeze, and a rise in stamp duty caused by the high property inflation of recent years.
The Rics is also forecasting that repossession levels will continue to rise this year, predicting that 123 homes will be repossessed each day of 2008.
Mr Stubbs comments: “Those who are struggling with mortgage repayments are still faced with paying a large percentage of take home pay but there may be some release of pressure as earnings continue to rise. If the Bank of England cuts interest rates next week, many will breathe a sigh of relief.”