House Prices Simply Too Expensive For The Young

Coeus

http://www.citywire.co.uk/money/houses-are-simply-too-expensive-for-the-young/a477289?re=13286&ea=282022&utm_source=BulkEmail_Money_Daily&utm_medium=BulkEmail_Money_Daily&utm_campaign=BulkEmail_Money_Daily

An article by 'CityWire' who I get much of my valuable fund research from - think it quite well sums up the state FTBs (myself included) find themselves in in the now and short-term future. I have taken a few extracts of the key points:

"(FTBs) Between December 2009 and December 2010, they shrunk as a group by 42%, thinned out by a form of financial selection in which only those with the means to meet giant deposit obligations got a loan."

"the average deposit had shot up to £31,500, or 94% of a gross average salary. Saving 40% was always an achievement. Saving 94%? More like a miracle."

"Even in a stalled and (gently) falling market, the average house price remains over £163,000, the average wage under £27,000, leaving a house price-to-average earnings ratio of around six."

"canny buyers know that new-build incentives are always factored into the price of the property. Nothing beats either a discount or (depending on how you look at it) true positioning of the asking price."

"The unpalatable truth is that the politicians can express their concern and outrage all they like, but property prices remain unaffordable for first-time buyers, and if providing credit to pay for unaffordable houses proved unsustainable in the past it will prove unsustainable again."


UPDATE 11-03-11

http://www.thisismoney.co.uk/mortgages-and-homes/article.html?in_article_id=525286&in_page_id=8

An article by 'thisismoney.co.uk' updates the falling mortgage lending throughout January 2011 contributing further to FTB inability to finance a house purchase. I have taken a few extracts of the key points:

"Mortgage lending plunged 29% in January as collapsing buyer demand combined with extreme cold weather, according to the Council of Mortgage Lenders."

"government spending cuts, rising inflation and the VAT rise had hit confidence."

"the group was eager to play down talk of a longer term falling off in demand."

"The fall in house purchase lending was split equally between first-time buyers and home movers. First-time buyers took 10,500 loans, worth £1.2bn, in January, down 28% by number (29% by value) from December. Home movers saw a fall of 29% by number from 25,400 to 18,000 - 28% by value from £4bn to £2.9bn."


For your awareness and discussion purposes,

Coeus.

Conrad

'Avergae prices' are of zero relevance.

A FTB can buy a 2 bed newish flat in Colchester, well within London commuting distance of London, for £85000. Where's the problem? North Kent has even cheaper property and there are many places all the way around London outskirts with such property.

Conrad

1 bedroom maisonette for sale

Offers in Excess of
£77,500

Chinook, Highwoods, Colchester




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Coeus

Zero relevance for the individual definately. But it terms of analysing the macro-economic position of the property market in the UK it is relevant.

Conrad

Coeus wrote: »

Zero relevance for the individual definately. But it terms of analysing the macro-economic position of the property market in the UK it is relevant.

Why?

There are loads and loads of affordable locations right accross the nation.
I had to make a sacrifice when I was FTB, and had to buy about 50 miles from work. So what?

Conrad

2 bedroom end of terrace house for sale St Johns Road, Ipswich

£99,950
PALMER & PARTNERS Bay fronted end of terraced property in need of complete renovation located to the popular East side of Ipswich. Early viewing is strongly advised. Popular East Ipswich Two Bedrooms Lounge 4.14m(13'7)x2.72m(8'11) Kitchen 2.77m(9'1)x2.39m(7'10) Cellar (cont.)

System

Conrad, FTB properties are 4 bed detached with a garage.

Conrad

2 bedroom flat for sale The Hollies, Mapledurwell, Basingstoke RG24

£79,950
Two bedroom first floor apartment offer on a shared ownership basis. The benefits to this property are two double bedrooms, lounge, kitchen, family bathroom, ample storage and security entry phone along with allocated parking.

Conrad

3 bedroom house for sale Dickens Street, Peterborough PE1

Conrad

2 bedroom terraced house for sale Gloucester, Gloucestershire

the_flying_pig

"...The Northern Rock [90% LTCV] loan – impressively – is application fee-free. It’s a 90% mortgage, charging interest at 5.99% for two years, 6.49% for three or 6.59% for five. Even without the fee, it’s hardly cheap, and it’s offered only after a strict affordability test. Amazingly, it’s available up to £450,000. That a first-time buyer mortgage is available up to almost half a million pounds says something about the state of the market. And that, not a shortage of credit, is the root of the problem. Not loan-to-value, but house price-to-earnings"