The UK was one of the few countries which experienced a rise in house prices in 2009. Some countries like Ireland, Spain and Central Europe experienced record falls of between 27 and 53% (according to RICS European Housing Review 2010)
However, the rise in house prices will come as little comfort for first time buyers based in the UK. Expensive house prices and the continuation of mortgage rationing means first time buyers are being asked for a record level of deposit before getting a mortgage.
The Council of Mortgage lenders state that the average first time deposit is £34,000 – equivalent to a full year’s salary. This is nearly triple the average deposit of three years ago, when the average deposit was a more manageable £12,000.
The Council of Mortgage Lenders predict that this trend of a large deposit is unlikely to change. Banks are still repairing their balance sheets (despite high profits from some such as Barclays) They also predict that home ownership rates are likely to fall. Home ownership rates have already fallen to 68%, after peaking at 71% in 2000.
Last month saw the first reported house price fall for 10 months. But, although prices may slip back a little this year, it is unlikely to solve the long term problem of supply shortages and expensive house prices.
Unsurprisingly 80% of first time buyers received help from their parents in getting their first deposit.
Related
2 comments ↓
I simply can’t believe that the average first time buyer has a deposit on their mortgage of £32k? I bought my first flat in May 2008 and didn’t manage to scrape anywhere near that amount together. Anyone who did manage a deposit of that size on their mortgage has done very well because if i was in that position when my mortgage renewal comes up in June I’d be able to get a much better rate!
Generous parents out there for sure.
I know, affordability is a distant memory. Owning a home in London in your 20′s is a dream for many it simply is out of the question. Scrapping stamp duty on property under 250k for first time buyers is not enough. Parents are increasingly being put under pressure to help out and many yougsters are being forced to stay at home for longer, where will it end?
Leave a Comment