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Growing disconnect between perception and reality for UK first time buyers, report suggests
The number of people buying their own home in the UK for the first time increased in 2014 but there is a growing disconnect between reality and perception of the market, new research suggests. According to the latest generation report from the Halifax improving economic conditions together with high profile government schemes such as Help to Buy, saw the highest amount of first time buyers purchase their first home for seven years. From a peak in 2006 of 402,800 first time buyers, numbers fell as low as 192,300 in 2008 before climbing back to 311,500 in 2014. Despite this the annual generation report found relatively little improvement in how potential first time buyers view their chances of getting on the housing ladder. The research also shows that 79% of 20 to 45 year olds believe banks don't want to lend to first time buyers, and 21% believe it is virtually impossible for first time buyers to obtain a mortgage. The Halifax says that there is clearly some work to do to dispel the myth that banks are averse to lending to first time buyers. And the proportion of people saving for a deposit has dropped 6% with some 43% currently saving to buy a property compared to 57% who are not. The lender says that this strengthens the view that more people may be giving up on owning their own home and are instead accepting renting as a viable way of living in a nice home, in an area they want to live in and in the right size of property. The Halifax also highlights the emergence of a new demographic split between those who want to get on the housing ladder and those who say they don’t at 13% in 2011 compared to 16% in 2015. The presumption that the UK is obsessed with home ownership may need revaluating and a lower level of home ownership may become the new normal, it adds. The research also shows that 53% think the Help to Buy scheme has had a positive impact, but 39% don’t know or are undecided and the three most cited barriers to home ownership among those who do not own a property are the size of the deposit for 57%, high property prices for 56% and low income for 53%. London has the lowest proportion of home owners aged 20 to 45 or 39% and the highest number of people in this age range who worry they will never own a home at 82% while non home owners are currently prepared to save for average of 5.35 years in order to save for a deposit whereas homeowners saved for an average of 3.6 years. The average amount that non home owners can afford to save each week is now £33.35 and 39% of 20 of 45 year olds are saving to buy two bed properties, split between flats and houses at 18% and 22% respectively. ‘This year’s report has… Continue reading
Planning permission in London too low to meet new housing targets
The current rate of planning permissions in London mean that just two thirds of the target number of homes that government officials say are needed will actually be built, according to new research. London’s planning system is allowing new homes at an annualised rate of just 27,470 as of the end of 2014, or just 69% of the target for 40,000 finished new homes each year announced by Chancellor George Osborne and London Mayor Boris Johnson in February and underlined in March’s Budget. An analysis of planning applications across the city by London estate agents Stirling Ackroyd shows just 6,780 homes were given planning permission in the last quarter spread over 826 different sites. These approvals represent 80% of all potential homes receiving a planning decision in the fourth quarter 2014. This is out of plans for 8,632 possible homes in the quarter. By contrast, if 100% had been approved, this could have allowed an annualised rate of up to 34,530 new homes, or 86% of the official target rate. In reality the number of homes reaching completion stage currently stands at an annualised rate of just 18,440 after the final quarter of 2014 saw just 4,610 properties finished in the space of three months. Despite this low base, London has seen an acceleration in finished homes. Last quarter’s figure represents a 30% increase from the third quarter of 2014. This is almost twice the acceleration in home completions seen outside the capital as across the rest of England there was a 17% uptick. However, new home starts were far lower last quarter, at just 3,040 or an annualised rate of just 12,160 homes per year. If this pace of housing starts continues and is reflected in the annual rate of completed homes it would mean failing to reach even a third of the government’s annual target. Out of all London’s boroughs, Tower Hamlets gave permission for the greatest number of new homes in the final quarter of 2014 at 1,197 dwellings spread over 25 different sites. This means more than one in six homes receiving planning permission in the capital was in Tower Hamlets, or 17% of the quarterly total. Second to Tower Hamlets in absolute terms was Croydon, where 682 homes came through the planning system, followed by Richmond with 591 dwellings approved in the quarter. At the other end of the scale Lewisham allowed just 11 new homes in the final quarter of 2014 out of a potential 18, while Kensington and Chelsea approved 13 out of 16 possible new homes and Lambeth only 17 homes out of a total of 40. Comparing the number of homes given permission to the total number of potential dwellings applied for via planning applications, boroughs vary by the leniency or rigour with which they have interpreted their guidelines. Greenwich and Hammersmith and… Continue reading
UK property sales could get boost from April pension changes
UK pension changes could trigger a significant increase in residential property transactions but for most households, this is unlikely to involve the acquisition of an investment property. But the increase in sales is more likely to come from continued trend of pensioners selling larger properties and properties in prime areas and purchasing smaller properties and properties in cheaper areas in order to release additional equity to help fund their retirement years, according to real estate firm Chestertons. In a new report it says that there are a number of reasons that property is likely to prove a popular investment choice for those who decide to take control of their pension pots and invest in something other than an annuity. These include the fact that residential property is generally seen as a less volatile and relatively safe long term investment, when compared to other assets such as equities and can provide a regular rental income. Also, a strong capital appreciation over the medium to long term is anticipated and property is a tangible asset that people generally feel more comfortable with and understand better than other more complicated investment vehicles. If estimates of demand turn out to be accurate then there is likely to be a near doubling in the number of pensioners buying at least one investment property and that would push house prices up. ‘If the properties purchased were then held as rental investments, this would help alleviate the current shortage of rented accommodation, which is especially prevalent in London, thereby stabilising the rental market somewhat,’ said Nick Barnes. However, he believes that financing a property investment is likely to prove difficult for many 55 plus year olds as lenders have been toughening their stance on borrowers who cannot repay their mortgage before retirement. ‘Buying properties with cash is of course an option, but with the average pension pot in the UK standing at just £25,000, the number of people with enough contributions to cover the cash purchase of a property will be very small, especially in London where prices are much higher,’ he explained. ‘The more likely scenario is that those looking to invest in property would need to supplement their pension pots by selling their existing property and either downsizing or moving to a cheaper area. This said, many pensioners have already taken these options and dipped into their pensions to help their children and grandchildren onto the property ladder so a significant uplift in activity is unlikely,’ he added. For those that can afford to buy an investment property, identifying the right property to ensure a longer term income stream and capital growth will be the challenge. Location and rentability are key issues and a realistic assessment of operating costs and voids will need to be made, the report points out. Barnes also said that tax liability is a further important consideration and owners will need to be aware that their rental income when added to their pension or… Continue reading
