|    FM Home   |    FM News   |    FM Forum   |    FM Blog   |   
Friday 05th of December 2008
June 5, 2008

Market downturn not enough to help first-time buyers


by Gill Montia
Market downturn not enough to help first-time buyers

Research carried out for housing intelligence firm, Hometrack, illustrates the dire affordability issue still faced by potential first-time buyers, despite falling house prices.

The study, which was carried out by Professor Steve Wilcox from the University of York, shows that 28% of UK workers cannot afford to buy even the cheapest property available in their locality.

Those living in London and south west England have been most disadvantaged by a decade of property inflation, with 41% of Londoners and 40% of those in the south west priced out of the market.

The most first-time buyer friendly region is the north east, where only 17% cannot afford to buy a property.

A 10% fall in property prices (which has been widely predicted for this year) should enable one-fifth of those keen to get a foot on the property ladder to buy a two or three-bedroom property.

However, Professor Wilcox points out that the benefits of declining house prices are being offset by a lack of cheap mortgage deals.

The study found that mortgage costs rose 12% on average last year, taking the percentage of income needed to service repayments up to average of 35%.

Both the author of the report and Hometrack’s director of research, Richard Donnell, believe that the ailing UK mortgage industry could prompt a severe downturn in the housing market.

Hometrack estimates that a widespread reduction in maximum loan-to-value ratios to 90% has increased the cost of buying a first property by an average of £10,000; the best mortgage deals around now require a 25% deposit.

Discuss this in the Finance Markets forums

Story link: Market downturn not enough to help first-time buyers


Add to Bookmarks:

ADD TO DEL.ICIO.US     ADD TO DIGG     ADD TO FURL

ADD TO STUMBLEUPON     ADD TO YAHOO MYWEB     ADD TO GOOGLE     ADD TO SPURL

 

 

Previous: « British people in denial about debt
Next: Interest rates on hold at 5% »

Visited 495 times, 1 so far today