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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
Official figures show fewer residential properties are lying empty in the UK
The number of empty homes in the UK is now at its lowest level since records began with a drop of over a third from 318,642 in 2004 to 203,596 in 2015. Figures also show an increase in the number of owner occupied homes in the past year, after seven years of decline, starting in 2007. The downward trend in ownership is continuing to level out after a fall from a peak of 69.5% in 2002 to 62.5% in 2015 and 62.8% in 2014. Data from the government also shows that the number of new homes up by a quarter in the last year alone, the highest annual percentage increase in net additional homes for 28 years. ‘We are turning around the housing market and making sure the best use is made of all housing including empty homes. We are very clear that a house should be a home which is why we have taken action to stop homes being bought up and left as an empty investment,’ said Housing and Planning Minister Brandon Lewis. ‘And we’ve taking forward the boldest ambition for housing in a generation, doubling the budget so we can help a million more people into home ownership, while delivering a bigger, and better private rental sector,’ he added. He pointed out that the government has introduced a number of measures to get homes back into use that have stood empty for years including rewarding councils for bringing empty homes back in to use through the New Homes Bonus and since April 2011, councils have been allocated over £4.846 billion for providing new homes. Other measures are providing over 704,000 additional homes, bringing over 106,000 empty homes will be back into use and providing 271,000 affordable homes and giving councils the power to increase Council Tax on empty properties. Alongside this charges have been introduce on certain ownership to prevent residential property being held through companies left empty and move to ensure that Capital Gains Tax is due on gains made by foreign owners who sell residential property in the UK, much of which is left empty. This means the same rules apply to residents and non-residents. Lewis added that the government is determined to provide more homes and has committed more than £20 billion over the next five years to help meet its ambition to provide a million new homes. He also pointed out that Right to Buy is being extended to 1.3 million people, shared ownership properties are being made available to a much larger number of people and 200,000 Starter Homes are being provided at a minimum 20% discount for first time buyers. Continue reading
