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Research reveals differences of opinion on UK first time buyer market
There is a wide difference between prospective first time buyers and their parents with regards to their perception of the first time buyer market in the new UK. New research shows that while just 12% of parents believe it is ‘virtually impossible for first time buyers to obtain a mortgage’ this rises to 21% of actual prospective first time buyers. The Generation Rent Report from the Halifax Building Society shows that in recent years parents and renters were both more pessimistic about the first time buyer market. However, with improving economic conditions and an increasing number of first time buyers since then, both parents and prospective first time buyers have become more optimistic although more than a fifth of renters still believe it’s virtually impossible. Despite increased optimism from parents the report also found that first time buyers moving back in with Mum and Dad is a growing issue, and in 2015 some 28% of parents said their children moved back to their family home, compared to 24% in 2012. Looking at how parents have supported their children in buying their first home, it becomes apparent that direct parental contributions towards the costs of a mortgage have remained steady. While a contribution towards a deposit has remained the single largest type of contribution the numbers have remained steady. The only increase in the last four years has been those helping with the actual costs of moving house. Some 57% of parents who own a property reported to having contributed, or planning to contribute, towards their child’s deposit, compared with 24% of parents who rent. And 24% of parents who own said that they were, or plan to be a guarantor on a mortgage compared with just 7% of parents who rent. As parental help is evidently more important for the people who want to get on the property ladder, it is interesting to note that parents who own their own home are more likely to help their children than those who rent. This clearly emphasises the importance of property ownership for the prosperity of future generations. ‘The report shows a clear divide between parents and their children as regards optimism over getting on the housing ladder. In reality there are more mortgages available which require a 5% deposit and first time buyer numbers are increasing,’ said Craig McKinlay, Halifax mortgage director. ‘But whether it is giving their children a cash lump sum or providing a roof over their heads while they save, it is clear the bank of mum and dad will have a role to play in helping their children get on the property ladder for the foreseeable future,’ he added. Continue reading
Modest price growth predicted for UK residential post general election
Continuity and stability has returned to the UK residential property market following a period of uncertainty where the threat of mansion tax amongst other measures caused a pause in activity. According to the latest market analysis from JLL the prime London market in particular breathed a sigh of relief as the prospect of mansion tax evaporated when the Conservative party won the general election last month and modest price growth is predicted in the short term. ‘Whilst in the six month run-up to the election the number of transactions recorded in some areas of the prime market cooled by a third. The question now is how strong the demand bounce will be and if we will return to the heady unsustainable rates of growth that fed the market in the 2009,’ said Adam Challis, head of residential research at JLL. The real estate advisory firm believes that whilst there will be a renewed level of demand in the prime central London market, underpinned by a more balanced supply backdrop, this will take some time to have an impact. ‘We have seen strength in activity resume in the prime central London market but we predict this to stabilise as the industry settles down and the new Government beds in,’ Challis explained. The report says that in central London new build activity, off-plan sales remained robust in the first half of 2015, with some sensitivity for high value property. Development activity has been shifting towards outer areas over the past 12 months, with annual starts up by 59.3% in contrast with central London, which is down by 43.2% over the year. Looking forward the firm believes that the focus needs to be on supply solutions that will tackle the real issue facing the UK housing market. ‘Policies to date have been about the demand-side solutions but Government needs to concentrate on policies that can drive a step change in supply solutions. Whilst these will take some time to bed-in and manifest themselves, they will be the solutions that ultimately provide the help where is it needed most,’ said Challis. JLL predicts that with five years’ worth of clear runway to aim at, it expects to see a continued rate of growth in housing market transactions that have been slowly gathering momentum since the Conservative majority victory on 08 May. The firm predicts that pricing is likely to remain under upward pressure, in line with a healthy, stable economic backdrop, real income growth, near term political risks subsiding and a sclerotic housing supply response will all play out. ‘Political risks are always present in residential markets. The UK needs a Government that actively seeks to provide certainty so that markets can behave efficiently for the benefit of the economy,’ Challis explained. However, the firm points out that with certainty and stability resuming, there are, however, three political changes that may create renewed tensions in the housing market; the European Union referendum, regional devolution driven by Scotland… Continue reading
UK home owners save average of £1,400 on stamp duty
UK home owners have saved £701 million in the six months since the introduction of the Stamp Duty Land Tax reforms last December, according to new research. The changes to how stamp duty is levied cut the tax for the 98% of people purchasing homes under £937,500 with each house buyer below this level saving an average of £1,400, says the analysis from conveyancing services firm myhomemove. ‘The stamp duty reforms have saved UK home buyers a significant amount of money since its introduction and provided an important boost to the property market, just as house transactions were starting to slow down in the run up to the general election,’ said Doug Crawford, the firm’s chief executive officer. He pointed out that the changes have a particularly positive impact on those struggling the most to get onto the property ladder, first time-buyers, as they can now save more money towards a deposit for their purchase. He also explained that under the previous system, there was a substantial increase in price at the stamp duty thresholds, which the reforms have reduced significantly, leading to greater movement up the property ladder and enabling home owners to aspire to own properties that would have previously been unobtainable. ‘While there are losers from the changes, these are a small minority of buyers. For them, the risk of a prospective ‘mansion tax’ was far greater than the increase in stamp duty. Early signs indicate that the election result has reassured buyers of higher value properties, with many estate agents reporting a buoyant market at the top,’ added Crawford. Continue reading
