First-time buyers locked out of property market
Housing charity, Shelter, has published a report that highlights just how difficult it has become for first-time buyers to get a foot on the property ladder.
Affordability is the main issue: the average price of a home has risen over 200% in the past ten years, while the average income in the UK has increased by 53%.
According to the report, mortgage repayments accounted almost 21% of the average working household’s income in 2007, compared with 12% in 1997.
For those able to bridge the affordability gap, the precarious state of the UK mortgage industry presents the next hurdle.
Many lenders will only offer best interest rates in return for a 25% deposit, while for a more expensive deal a 5% deposit is acceptable.
Despite indications that house prices are now falling, making it a good time to buy a first home, many potential first-time buyers cannot meet the stricter lending criteria that continue to pervaded the mortgage market.
The situation is at its worst in London, where the average first home costs £100,000 more than the national average of £160,000.
Shelter’s chief executive, Adam Sampson, paints a gloomy picture of a generation of young people and young families being locked out of the housing market.
In consequence, they are unable to begin accruing the kind of wealth, in terms of housing assets, held by their parents’ generation.