First time buyers priced out...

DervProf

HAMISH_MCTAVISH wrote: »

Oh, there most certainly is.....

Do you think you're the only person in Britain with a savings account and a desire to own a house???

Not all FTBs will be using their savings accounts. Some will be waiting for zero or virtually zeo deposit mortages to return.

shortchanged_2

julieq wrote: »

The important part is that you don't need first time buyers in the housing market to sustain prices, you just need demand for housing. Yield and capitalism will do the rest.

I would still like to see you justify this statement julieq.

HAMISH_MCTAVISH

DervProf wrote: »

Not all FTBs will be using their savings accounts. Some will be waiting for zero or virtually zeo deposit mortages to return.

True, but getting back to the reason we all mention deposit restrictions don't prevent HPI, they merely delay it.

I'll give an illustrative example, because the actual numbers aren't to hand.

Pre crash, anyone can buy, there is little to no pent up demand building, so sales to FTB-s are 400,000 per year.

Post crash, a lot of aspiring FTB-s get caught out with insufficient deposits. So only 200,000 FTB-s per year can buy, ie, those with rich parents or very high income.

The rest have to wait and start saving.

Now, assume that saving the deposit takes 4 years. (which is the number mentioned by a member of the MPC in a recent speech)

FTB Sales now look like the following.

2007 -- 400,000
2008 -- 200,000
2009 -- 200,000
2010 -- 200,000
2011 -- 200,000 <---- We are here
2012 -- 400,000
2013 -- 400,000
2014 -- 400,000
2015 -- 400,000

Now in reality, FTB numbers probably won't double next year, but you get the idea. At some point, be it this year, next year, or the year after, significant numbers of FTB-s that have managed to save the deposit are going to start being added to the existing pool of FTB-s with access to BOMAD.

Also don't forget, at some point in the next few years, lending will start to be significantly more available. Probably from 2013 onwards, as the SLS has to be repaid by 2012.

And in addition to that, housebuilding is at the lowest levels since 1923, continues to fall (new starts down 41% year on year), and the number of FTB age people is about to expand as the biggest generation in history reaches that age.

So if someone want's to say there is no race for FTB-s to buy in the next 6-12 months, I'd probably agree with that.

But at some point in the next year or two, a pretty big surge in demand is going to crash into several years of incredibly low housebuilding, and the only possible result is rising prices and real constraints around choice of decent properties.

So there most certainly is a time pressure on FTB-s to get in before that happens.

IveSeenTheLight

shortchanged wrote: »

I would still like to see you justify this statement julieq.

It's not just FTBers that buy into the bottom end of the market.
There's downsizers and BTL.

We can see that the percentage of owner occupancy is reducing, meaning that there is more demand for rental properties.

http://www.cml.org.uk/cml/publications/newsandviews/85/313

We can also see the BTL market expanding

http://www.cml.org.uk/cml/media/press/2837

It's fairly easy to understand that if demand for rental properties is increasing, it leads to an increase by investors to capitalise on the rental market and the yields that can be obtained

When you consider that not enough properties are being made available to support the increase in households in the UK. You can understand that there is going to be increased competition for properties both rental and to purchase creating and inbalance between supply and demand.

[Note] Yes I do understand that Demand = Desire and Ability [/Note]

http://www.independent.co.uk/news/uk/politics/uk-housebuilding-at-lowest-level-since-1923-2217888.html

http://www.statistics.gov.uk/pdfdir/mig0211.pdf

Percy1983

Cleaver wrote: »

I agree, and I think it relates to my post above. To a certain extent when you buy a house is largely irrelevant, at least in terms of mortgage rate and the price of the house. If I were a FTBer today, I'd be asking myself the following questions:

• Do I have at least a 20% deposit for the house I want?
• Am I buying a house which seems good value? By that I mean, not my own definition of 'good value' ("pah, that house on for £200k is blatantly only worth £100k...". I mean a house that is similar to 2005/6 prices, or isn't priced at top whack, street record price.
• Can I get a mortgage for 4% / 5% fixed for five years or so?
• Is my mortgage repayment 35% or less than my monthly pay?
• Am I ready to see my house go up and down in value over the next decade? Am I ready to face interest rates at 8%?
• Am I ready to see further falls of maybe 10% or more and just be happy that I've bought a house I love, at a rate I can afford that I'm in for the long term? Will I be comfortable seeing my house fall in value?
• Do I really feel that I want to buy a place rather than renting one? Do I know why I want to buy rather than rent?

If you can answer 'yes' to all of these, then buy a house. Stop worrying about price falls, stop trying to time the market and stop over analysing. You're owning something for decades and decades with hundreds of unknown factors, but you'll probably end up okay. If you answer 'no' to any of the questions, then don't buy a house.

To be honest this does sum me up, I am not waiting for an optimum point but rather just to get my deposit together. I will add we are saving quite aggressively and don't drink/smoke or have any holidays planned.

I will agree there isn't the same race, if prices where still rising I would buy a 2 bed semi right now just to get a stake in the market. As it is prices seem stable in the areas I am looking at so we may aswell save a little longer.

With that if the market turns for the worse (prices rising in my terms) the plan will change very quickly.

shortchanged_2

As I stated on another thread while I can see some merit in the argument that low numbers of FTB's do not necessarily mean reduced prices in the short term, however I doubt very much if this argument holds much water over the medium to longer term picture.

chucky

shortchanged wrote: »

As I stated on another while I can see some merit in the argument that low numbers of FTB's do not necessarily mean reduced prices in the short term, however I doubt very much if this argument holds much water over the medium to longer term picture.

if owner occupier numbers continue to fall it means there will is increased rental demand.

an increased rental demand means that rents won't fall and will probably increase which obviously means yields increase making BTL more attractive.

on the other hand, if owner occupier numbers increase it means more people are buying property which probably means everyone including FTBs.

IveSeenTheLight

shortchanged wrote: »

As I stated on another while I can see some merit in the argument that low numbers of FTB's do not necessarily mean reduced prices in the short term, however I doubt very much if this argument holds much water over the medium to longer term picture.

It depends on where you think the likelyhood that properties will transpose in the future.

It took time for owner occupancies percentages to increase to the peak of 70.3%.

It may take time (possibly a similar amount) if the demographic is to revert to the majority of people renting.

Properties are not liquid and people may not need to sell. There are a larege percentage of properties owned outright, so this will take time to filter through.

shortchanged_2

chucky wrote: »

if owner occupier numbers continue to fall it means there will is increased rental demand.

an increased rental demand means that rents won't fall and will probably increase which obviously means yields increase making BTL more attractive.

on the other hand, if owner occupier numbers increase it means more people are buying property which probably means everyone including FTBs.

Thing is though surely most BTL'ers want to get their property at as cheap a price as they can because it is for investment purposes. So most BTL'ers are not likely to pay top prices for property.

chucky

shortchanged wrote: »

Thing is though surely most BTL'ers want to get their property at as cheap a price as they can because it is for investment purposes. So most BTL'ers are not likely to pay top prices for property.

people buy investment property to make their profit through the property increasing in value.

others buy property because it provides a steady cash flow yield month after month. don't get me wrong it's better to buy at the lowest points in the cycle, but not everyone does.

it depends why you invest in property, for the yield or capital appreciation.