Investment
First time buyers increased in the UK in March and paid less for their home
The number of first time buyers in the UK increased in March to a total of 32,500, the highest figure since June 2014, according to the latest tracker report. Overall first time buyer volumes grew by 47.7% on a monthly basis and as well as cheaper prices the burden of deposit costs and mortgage payments dipped, the data from the Your Move and Reeds Rains report shows. This means that, between February and March, the total flow of buyers managing to step foot on the ladder for the first time grew by 10,500 and on an annual basis, the total number of first time buyers in March grew by 34.9% compared to March 2015. Adrian Gill, director of estate agents Your Move and Reeds Rains, pointed out that while much was made of March being the month of the buy to let landlord and the second home buyer due to the April deadline for additional stamp duty, the surge was not at the expense of the bottom rungs of the ladder. He believes that a continuation of the broadly positive economic climate has likely been a factor spurring would-be first time buyers. ‘However, what’s really getting those numbers up is the fact that the range of support options available to first time buyers is at last beginning to be recognised and utilised,’ he said. ‘The Help to Buy scheme is assisting those with limited capital recognise their dreams, while the Government’s offer of cut price homes for first time buyers is easing supply in a part of the market that typically struggles to match roaring demand with constrained supply,’ he added. The data also shows that March has seen a lightening of home ownership costs and the charges associated with it. The average purchase price paid by first time buyers in March stood at £166,559, down 1.2% in absolute terms compared with February which previously marked the highest average price on record. But on an annual basis, the average purchase value of a first time buyer property rose by 9.2%. Deposit and monthly mortgage payment costs also declined. First time buyer deposits averaged £28,233 in March, down 4.1% compared with the previous month. In addition, the proportion of an average first time buyer’s monthly income that is consumed by deposit costs fell 3.1% between February and March from 74.9% to 71.8%. Meanwhile, over the same period, monthly mortgage payments accounted for a steadily decreasing amount of average first time buyer income, falling from 20.4% of monthly income in February to 20.3% as of March. Besides the falling costs of home ownership, lending conditions for firs time buyers have remained favourable. The average loan to value (LTV) ratio reached 83% in March, marking a 0.5% uptick on the previous month, meaning first time buyers will be able to borrow more against the value of the home they wish to purchase. The average first time buyer mortgage rate continues to fall, dropping from 3.14% in February to… Continue reading
Many first time buyers in UK expect to be paying for mortgage into retirement
A third of young people in the UK expect to still be paying a mortgage beyond age 60 with over half worried that they would not be able to afford the payments when retired, new research shows. Rising house prices are an increasing concern to people trying to get on the housing ladder but many are still determined to own their home, according to the latest annual Generation Rent Report from lender the Halifax. Overall some 34% expect to work beyond retirement age to pay off their mortgage, 44% are worried that they won’t be able to afford their mortgage payments in retirement and 51% are worried that paying their mortgage will hamper their ability to save for retirement. Despite this, the report reveals that home ownership aspirations remain as strong as ever and that those late to the ladder are taking a range of measures to ease the financial burden. Indeed, the numbers of first-time buyers have recovered strongly in recent years, with 300,000 taking the first steps onto the property ladder in 2015. The average age of a first time buyer is now 30.4 years, nine months older than in 2010. Some 49% of aspiring first time buyers believe that buying with a partner is the most likely measure to consider to make owning a home more affordable while 34% say it is extending a mortgage beyond 25 years. In 2007 the proportion of first time buyers taking up a 35 year mortgage stood at 16%. By 2015 this figure had grown to 26% and over the same period, the share of mortgages with a 20 to 25 year term dropped from 48% to 30%. As well as 34% expecting to still be paying a mortgage aged 60, some 6% still expect to be paying their mortgage over the age of 70, while 8% expect to be paying their mortgage throughout their life. Only 46% believe they will be mortgage free before they retire, falling to 30% of non-home owners. The research also shows that 34% expect to work beyond retirement age to clear their mortgage and while for current owners this is 28%, for those not yet on the housing ladder 39% believe they will be working later in life. Some 44% are worried that they won’t be able to afford their mortgage payments in retirement and 45% are worried that the cost of their mortgage will mean they have to work longer while 51% are worried that paying their mortgage will hamper their ability to save for retirement. ‘Despite the barriers and the understandable concerns, it’s very positive to see that younger generations are still striving to get onto the housing ladder, with more than 300,000 taking that first step in 2015,’ said Craig McKinlay, mortgages director at the Halifax. ‘This recovery has been fuelled by a number of factors, including an abundance of successful Government initiatives and the affordability of monthly mortgage repayments due to the continuing low interest rate environment… Continue reading
Global business putting investment in UK commercial property on hold due to Brexit concerns
International businesses are postponing investment in the UK in the wake of uncertainty about the country’s membership of the European Union ahead of a referendum in June. The latest UK Commercial Market Survey from the Royal Institution of Chartered Surveyors (RICS) indicates that demand for UK commercial property among international investors has stalled. It says that short term uncertainty has contributed particularly to falling international investment demand in central London and rental and capital value projections have been scaled back since the announcement last year that a referendum would be held. On top of this only 6% of the RICS survey respondents believe that Brexit, the term given to a UK decision to leave, will have positive impact on the country’s commercial property sector The demand indicator among international investors for UK commercial property is now at its lowest level since RICS records began in 2014 with just 5% of members surveyed reporting increased interest from overseas companies over the last three months. This is a considerable drop from 36% in the second quarter of 2015 Uncertainty caused by the EU referendum has been cited by 38% of RICS members working within the sector as the reason why major international retailers and other businesses have been nervous of investing in Britain. Should Britain leave the EU, some 43% of respondents feel that it would have a negative impact on the commercial property sector and only 6% said a Brexit scenario would have a positive impact on the commercial property sector. RICS says that some international firms are drawing up contingency plans to shift their headquarters in the event of Brexit. Overseas firms based in the UK occupy large swathes of real estate, and their departure could harm office occupancy rates, and the local economy. Likely beneficiaries of a Brexit are Paris, Frankfurt and Dublin, although the report said London was likely to remain a magnet for investment. The report points out that while investment rates have eased, they are not frozen. ‘There is no doubt that since the EU referendum became a certainty following the general election last May we have seen a decline in interest from overseas investors in UK commercial property,’ said RICS chief economist Simon Rubinsohn. ‘At least in the short term, we know that international retailer and service providers are finding the UK market less attractive,’ he added. The report also suggested that British farmers, many of which rely on payments from the EU’s Common Agricultural Policy to pay their rents, would take a big hit if the UK leaves the EU. The RICS EU Referendum Paper shows that a range of key industries from residential housing to construction and rural have been hit by short term uncertainty. However, across the board, in the longer term steady growth is still predicted across rural, land and built environment sectors. It suggests that in the event of Brexit, farmers will most likely lose access to the EU single market and CAP. The question… Continue reading
