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First time buyer lending up but still down on a year ago, latest mortgage data shows
Lending to first time buyers in the UK increased in June but overall has changed little since the same month a year, ago, according to the latest report from the Council of Mortgage Lenders. Home mover lending also increased and saw a slight yearly increases in volume and value while home owner remortgage activity increased by over a third month on month and year on year. The CML data also shows that buy to let continues to grow year on year and month on month, mainly driven by buy to let remortgage activity. The first quarter of the year saw the mortgage market slow but now lending to first time buyers increased in number and amount by over 20% in the second quarter of 2015. ‘Notable this month is the uptick in remortgage activity among home owners, perhaps reflecting an increased desire to lock into competitively-priced mortgage deals in advance of any rise in rates,’ said Paul Smee, director general of the CML. ‘It is likely that people are now beginning to feel a rate rise is a realistic prospect and not just a distant theoretical possibility. After a slower than expected start to the year, lending now appears to be picking up as we expected, and in line with our recently revised forecasts,’ he added. According to Adrian Gill, director of Your Move and Reeds Rains estate agents, a shortage of affordable properties is affecting the prospects for first time buyers. ‘While the demand hasn’t gone anywhere, the goalposts have shifted. Even with a leg up from government schemes, those looking to make their first foray onto the ladder are having to be more open minded about what they can afford, and these home buying incentives and cheap mortgage finance won’t hang around for ever either,’ he said. ‘In the long term, those who can’t act now will be reliant on more house building to replenish the stock of homes available, and keep mortgage repayments and deposits within grasp,’ he added. Tougher regulation is restricting lending for affordable homes, according to Patrick Bamford, director of mortgage insurance Europe for Genworth. ‘Even improved affordability of loans is not enough to produce a notable increase in first time buyer activity year on year,’ he explained. He also pointed out that following the recession there has been a drastic fall in home ownership, particularly among younger people, across all regions of the UK impacted by high house prices and a lack of supply. ‘The South East and North West have been particularly hard hit, with the shortfall in numbers when compared to pre-recession greater than the entire populations of Brighton and St Helens respectively. We are still a long way from closing the gap and returning to a normal first time buyer market,’ said Bamford. ‘It is crucial for the government to introduce a permanent system of private mortgage insurance to accompany its planning reforms and drive a thorough recovery of the… Continue reading
Research reveals chromic shortage of first time buyers in UK housing market
The UK housing market is experiencing a potentially serious shortage of first time buyers, particular in the South East and North West, new research has found. First time buyer activity in the North East and Yorkshire and Humberside is less than half of what it was pre-recession while London is the least affected, according to the report from private mortgage insurer Genworth based on an analysis of government and industry data. The South East averaged 86,733 first time buyers a year from 1974, when records began, up until 2006. But since 2007 when the financial crash hit, this has fallen to just 47,863 a year. As a result, this has created a total shortfall of 310,967, the biggest of any English region. The North West has also seen first time buyer numbers drop from 46,461 a year between 1974 and2006 to 23,875 between 2007 and 2014. This has created a shortfall of 180,685 first-time buyers. The North East’s first time buyer market is less than half of its pre-recession size as the data analysis shows that the average number of first time buyers between 2007 and 2014 at 10,575 is just 46% of the pre-2007 average of 23,191, the lowest percentage of any region. In contrast, London is the least affected in relative terms and has lost just a quarter of its first time buyers in percentage terms. Its average of 39,175 between 2007 and 2014 is equal to 73% of the pre-recession average, despite the continued house price increases London has seen in recent years. The report says that comparing these shortfalls to the regional populations of 18 to 45 year olds who are traditionally first time buyers, suggests a significant percentage are potentially ‘denied home owners’ as a result of the fall in first time buyer numbers. For example, a shortfall of 100,927 first time buyers in the North East compared to an 18 to 45 population of 1.3 million means as many as 21% could be classed as ‘denied home owners’. In the South East a shortfall of 310,967 compared with an 18 to 45 population of 1.6 million means 19% are in the same position. ‘Tougher regulation and higher capital requirements for lenders as a result of the recession have accelerated the fall in homeownership and dramatically reduced the number of people, especially younger households, who are able to buy their first home,’ said Simon Crone, vice president for mortgage insurance Europe at Genworth. ‘A dual crisis has emerged with the shortage of new homes exacerbated by a shortage of loans traditionally used to help first time buyers get on the property ladder with 5% or 10% deposits. Our analysis shows that all regions have felt the impact of the squeeze on first time buyers, regardless of the so-called ‘North/South’ divide,’ he explained. ‘While London and the South East face the biggest pressure of high house prices, a lack of housing… Continue reading
Foreign buyers boosting Spanish property market, especially on Costa del Sol
An increased number of foreign buyers is set to boost the residential property market in the Costa del Sol in Spain, one of the country’s most popular areas with overseas purchasers. A new market forecast report from Instituto de Practica Empresarial (IPE) business school, in collaboration with property company Mar Real Estate, suggests the market could grow by 10% in the area. It also says that the market is set to grow by between 5% and 7% in major cities such as Madrid and Barcelona and 3% in other cities. The IPE says that home prices on the Costa del Sol are already up 10% this year, and now represent 5% of all sales nationwide and if sales continue growing at their present trend, the property market in Málaga province will increase to 20% of the overall Spanish market. The growth is buoyed by foreign demand for holiday homes on the Costa del Sol and the IPE report suggests that surging sales will help reduce the glut of new homes on the coast. Indeed, the excess inventory of new homes is expected to fall by 50% this year. Luxury home sales, in particular, are coming back strongly on the Costa del Sol, according to the IPE report, driven by a better exchange rate in Pounds and Dollars, and the security and stability of Spain. Meanwhile, the latest report from property valuation firm Tinsa says that the Spanish property market is undergoing a widespread recovery. Average property prices fell by 2% year on year in July, the lowest rate of decline since May 2008 but this masks growth areas along the Mediterranean coast in particular with some areas seeing price growth of 2.8% year on year. The data shows that on the Mediterranean coast, where prices have fallen by an average of 47.6% since the economic downturn, the average price of a home has increased by 3.8% since the end of 2014. This is more than large cities and the Balearic and Canary Islands where average prices have risen by 0.2% and 0.9%, respectively. Tinsa data also shows that five of the top 10 most expensive property hotspots are located in the Balearic Islands but Alejandra Vanoli, managing director of Mallorca Sotheby’s International Realty, said that there are prices per square metre in these locations that far exceed Tinsa’s estimations. ‘It’s not unheard of to reach as high as €30,000 per square metre for the most desirable Port Andratx home. Demand is strong from some of the wealthiest individuals and families in Europe, the US and beyond,’ she explained. Tinsa figures also suggest that the Balearics weathered the storm of the Spanish property market price ‘correction’ more positively than the rest of the country. While the average drop in prices across the whole country stands at 42%, in the Balearic Islands most regions registered less than a 35% decline. Palma was also highlighted by Tinsa as property transactions increased by more… Continue reading
