Tag Archives: finance
First time buyers need average earnings of £50,000 to buy a home
First time buyers in the UK need to earn on average of £50,000 a year to get on the property ladder, new research reveals. However, in 51 out of 65 cities, the average salary is below the minimum required to buy a flat, according to the study from comparison website GoCompare. The most affordable place to buy in the UK is Blackburn where a salary of £14,000 a year could be enough to buy a flat but a minimum household income of £140,000 a year is needed to buy a flat in London. In the capital a minimum of £275,000 is needed to buy a detached house where the average price is at £869,415 yet the median average salary in the capital is just £30,338. So Blackburn is almost 10 times cheaper than London. The median average salary in the Lancashire town is £18,444, making it one of the few places in the UK that are affordable. After Blackburn, the cheapest places to buy property are Hull, Blackpool, Grimsby and Stoke-on-Trent where a salary of just £15,000 could be enough to purchase a flat. Outside of London it is Brighton, Edinburgh, Bristol and Oxford which are the most costly. Minimum salaries to get on the property ladder in these cities are £60,000, £60,000, £58,000 and £54,000 respectively. ‘Although owning a home may be achievable in places like Blackburn and Sunderland, in other parts of the country the rapid rise in property value and a growing urban population is pricing many of the British public out of home ownership,’ said Ben Wilson, home insurance expert at GoCompare. ‘London’s high prices are well documented, but it’s in other parts of the south of England that the gap between average salary and average house price is at its most alarming, with places like Brighton requiring a minimum household income of £180,000 to afford a detached house,’ he added. Continue reading
UK property price set to rise by an average 17% by end of 2020
House price growth across the UK’s mainstream markets has exceeded expectations in 2015 but there is still room for further increases providing interest rates do not rise too steeply, according to new research. The timing and pace of interest rate rises, coupled with patterns of economic growth at a regional level, will dictate the distribution and sustainability of any increases, says the report from international real estate adviser Savills. The firm forecasts that prices will rise by an average of 17% by the end of 2020, ranging from 21.6% in the South East to 12% in the North East, assuming that mortgage rates do not exceed 4.5%. Any combination of higher house price growth or high mortgage rates could leave affordability looking stretched. Much depends on the speed at which interest rates rise. If rates rise too quickly mainstream house price growth will be quickly curtailed. On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when they do eventually rise,’ said Lucian Cook, head of Savills residential research. ‘That risk has been mitigated by recent mortgage regulation which, by stress testing affordability, caps the amount people can borrow relative to incomes. That is likely to cap price rises, particularly in London, where house price to household income ratios are highest, thanks to growth seen over the past 10 years,’ he added. London’s mainstream markets are expected to underperform its hinterland, with average growth of 15.3% forecast over the next five years, though this will range from 20% to just 10% depending on specific location and post downturn levels of house price growth. Lower value outer London boroughs have greater remaining capacity for house price growth than higher value parts of the capital, having grown in line with the South East and East of England rather than London itself over recent years. While Walthamstow and Lewisham are expected to show the strongest growth, outperforming the mainstream submarkets of boroughs such as Hammersmith and Fulham and Richmond. The strongest price rises are therefore expected in parts of the south and east of England, which offer value relative to the capital so should benefit as the ripple gains traction. Growth beyond will depend on the strength of regional wealth generation and the ability of cities such as Manchester and Birmingham to act as catalysts to reinvigorate their housing markets. At the same time, annual transaction levels, at just over 1.2 million this year, are expected to reach 1.3 million in 2020, far short of the pre-crunch norm of around 1.7 million, as deposit affordability continues to act as a brake on demand and the changes to the taxation of buy to let property restrict the ability of some landlords to expand their portfolios. Continue reading
A good haggle helps home buyers pay less, new research shows
When it comes to buying a new home the majority of UK buyers are prepared to haggle and usually save money as a result, new research has found. Which? Mortgage Advisers asked people who had bought a property in the past five years what their initial offer was, whether they negotiated and what they eventually paid. The survey found that 73% of home buyers initially offered below the asking price for their property, and as many as 66% were successful in securing their property for less than the advertised price. Home buyers in Wales and the Midlands were the happiest to negotiate, with 79% and 78% respectively initially offering less than the asking price. In comparison, only 60% of home buyers in London initially offered less. Buyers in Wales, Birmingham and Manchester had the most success when negotiating, with 74% in Wales and 69% in Birmingham and Manchester securing their homes for less than the advertised price. Those that paid the asking price or more cited a number of reasons for doing so, but generally they were motivated by the stiff competition for properties. Indeed, some 25% who paid the asking price or above said that this was due to competition for their dream home, and 21% said that they were involved in a bidding war. ‘Don't be afraid to haggle, even if you've already set your heart on a property, as unless you're in a very competitive market, it will be expected. Having knowledge of the seller's position and the local market is a good idea and can often help secure the property for less,’ said David Blake from Which? Mortgage Advisers . ‘Today's property market has become incredibly fast paced and so for those requiring mortgages, seeking advice early will put you in a strong position to move quickly,’ he added. Continue reading
