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UK first time buyers now buy almost half of all homes with a mortgage
First time buyers in the UK account for almost half of all homes bought with a mortgage, a rise of 38% since 2011, new research shows. They make up 47% and are having to find a 6% higher deposit than a year ago but save when it comes to Stamp Duty, especially when buying in London, the study from the Halifax shows. Overall there were an estimated 139,500 first time buyers in the first six months of 2015, a 7% fall compared with the same period in 2014 and although this is the first annual decrease on this basis since the first half of 2011, it is still the highest total for the first six months of the year since 2007 and was 92% higher than the market low recorded in the first half of 2009. And despite the decline in purchases by first time buyers this year as a proportion of all mortgage financed house purchasers the proportion remains steady. Indeed, the number of FTBs has increased more rapidly than the number of subsequent buyers over the past few years, from 38% in 2011 to 47% in 2015. The average first time deposit in May 2015 was £29,894, 6% higher than in May 2014 and the report explains that this largely reflects the increase in house prices over the past year. The average first time deposit is now 82% or £13,494 higher than in 2007. Recent changes to stamp duty have saved the average first time buyer £716, reducing the tax bill for someone buying the average priced of £178,370 from £1,783 to £1,067. Savings for the average first time in London are much bigger than this with a reduction in the stamp duty bill for the average first property in the capital of £3,154. ‘There was a modest decline in the number of first time buyers in the first half of the year following the substantial increases recorded in 2013 and 2014. This fall has been in line with the general softening in market activity,’ said Craig McKinlay, Halifax mortgages director. ‘However, there are now signs of a pick-up in mortgage activity as the economy continues to recover and mortgage interest rates remain at very low levels. These factors could boost the number of first time buyers during the second half of the year,’ he added. The research also shows that the average price paid by first time buyers increased by 8% over the past year from £165,829 to £178,370, some 9% higher than in 2007 while in Greater London it is £342,313, more than £100,000 higher than the next most expensive region, the South East at £225,383. Northern Ireland is the least expensive region in the UK for a first time buyer with an average price of £104,240. The average deposit, as a proportion of the purchase price, has fallen from 20% in 2013 to 17% in 2015. It, nonetheless, remains significantly higher than in 2007 when it was 10%. First time… Continue reading
Property prices and sales still falling in Dubai and Abu Dhabi
Residential sales and prices in Dubai are still on a downward trajectory and in neighbouring Abu Dhabi the market is also down apart from rentals. The Dubai residential property sales price index from REIDIN fell by 1.29% in May and prices are now down 5.7% year on year. A breakdown of the figures shows that apartment sales prices fell 1.19% month on month and are down 6.8% year on year while villa sales prices registered were down 1.72% on a monthly basis and down 0.8% year on year. Residential property prices in the Dubai rental market fell by 0.37% in May 2015 but have increased 1% year on year. In this sector apartment rental prices fell 0.44% month on month but are up 1.2% year on year while villa rental prices also fell 0.44% month on month and are unchanged on an annual basis. The firm’s Abu Dhabi residential property price index fell by 0.27% in May and prices are down 2.3% compared to May 2014. A breakdown of the figures shows that apartment sales prices fell 0.52% month on month and 4.5% year on year while villa sales prices increased 0.8% on a monthly basis but are still down 1.2% year on year. Residential property prices in the Abu Dhabi rental market have fared better, up 0.37% month on month and up 5.1% compared to May 2014. Apartment rental prices increased by 0.18% month on month and 2.8% year on year while villa rental prices were up 0.68% on a monthly basis and 7.5% year on year. Meanwhile, the latest figures from the Dubai Land Department (DLD) show that Dh64 billion of property transactions were completed in the first quarter of 2015 of which Dh24 billion was from property and land sales and Dh37 billion the result of new mortgages. The most popular areas for unit sales were Business Bay, where 1,202 units were sold for a combined Dh1.84 billion, followed by Dubai Marina. Of the Dh24 billion worth of land and property bought, some Dh9 billion was bought by GCC investors with Dh5.8 billion to Emiratis and Dh1.9 billion to Saudis. Dh3 billion was from other Arab investors and Dh12 billion from non-Arabs. When it comes to buyers outside of the Gulf region, the data shows that Indians bought Dh3 billon of properties, British buyers bought Dh1.9 billion and Pakistanis bought Dh1.4 billion. Iranian and Russian buyers rounded out the top five nationalities of non-Arab investors. ‘The figures are showing a well-established trust in our real estate market,’ said the DLD director general, Sultan Butti bin Mejren. Continue reading
Bank voices concern about higher mortgages and potential effect on UK economy
The Bank of England is concerned that home buyers are taking on bigger mortgages because house prices are rising too fast in the UK, but it is first time buyers who are not offered enough, experts warn. The Bank says that with prices rising faster than mortgages there could be rising debt levels and the economy could be at risk if interest rates rise and home owners struggle to keep up with their mortgage payments. The Bank's deputy governor, Sir Jon Cunliffe, said he is prepared to step in if the debt mountain gets out of hand in the bank’s latest financial stability report. 'Our concern is not so much about house prices, it is the chain between high house prices, prices growing faster than people's incomes, and people having to take out bigger and bigger mortgages and the debt that families then have relative to their income growth,’ he explained. Bank took action a year ago amid similar concerns and put a debt to income limit on mortgage lending. While the market cooled in the second half of the year it is now rising again on a steady basis. ‘Prices stopped growing as fast as they have been, mortgage approvals came down. There are now signs the market is coming back up again. We are not seeing the sort of growth in momentum we saw this time last year, but given the high level of debt to income we have in the UK anyway, and the ability of this market to move very fast, this is something we need to watch and that's why we have left that insurance policy in place,’ Cunliffe added. But his comments come at a time when mortgage lending is still low compared with historical averages and experts have voiced concerns about certain sectors in particular are seeing fewer loans available, for example first time buyers who are crucial to the health of the housing market. Indeed, a new analysis in the latest edition of the Genworth/Moneyfacts mortgage tracker report says that new product launches and falling interest rates are masking a growing crisis in high loan to value (LTV) mortgage lending. Despite more products being offered at record low prices, Genworth’s analysis of government and industry data suggests this part of the mortgage market is rapidly falling back into decline. It reveals that with total 95% LTV lending down by £147 million year on year in the first quarter of 2015, average lending per product has dropped by 38% over the same period. This has contributed to a 10% fall in first time buyer numbers which means that 10,400 fewer people have succeeded in buying their first home so far in 2015 than was the case last year. It also points out that new products come with extra price premium despite rates hitting record lows. The Tracker shows the number of products available to house buyers with a 5% deposit hit a… Continue reading
