Press Release Summary: Tis the season to be jolly.or perhaps not, for first-time buyers. Recent housing market trends and statistics have shown a particularly negative picture for this group
Press Release Body: \'Tis the season to be jolly.or perhaps not, for first-time buyers. Recent housing market trends and statistics have shown a particularly negative picture for this group, with decreasing affordability and higher interest rates combining to reduce both the total number and overall market share of new home buyers.
Given the potential market buy-to-let landlords can offer to those either unable to get on the housing ladder at present, or unwilling due to the uncertainties presented by the credit crunch, it remains an issue of considerable relevance to the rental market as well.
The latest figures from Halifax may appear to provide clear evidence that the first-time buyer market is in serious decline. Its survey of this segment found that in 466 of the 483 towns assessed the average house price was classed as unaffordable (four times average salary or higher). This included all towns in the south-west, East Anglia, east Midlands, Yorkshire and the Humber and Northern Ireland.
Part of the response, Halifax noted, was for an increase in flat buying to take place, with these homes now level with terraces as the most popular type of first-time property at 37 per cent. But overall, the bank estimates that just 300,000 first-time buyers joined the housing ladder in 2007, the lowest figure since 1980 and 232,000 less than 2002.
Small wonder, then, that Martin Ellis, chief economist at Halifax, commented that: \"Rising property values have priced many potential first time buyers out of the housing market.\" That much seems obvious. But he added: \"A more subdued housing market over the next few years is a positive step for potential new entrants. Lower than average earnings house price growth together with more government initiatives may, in time, address the issue.\"
Despite the gloomy present synopsis, there are already signs that this may be happening. Figures from the National Association of Estate Agents (NAEA) suggest the market for first-time buyers may have bottomed out and begun a tentative recovery, with the downturn of recent months and an end to the high house price inflation trend conspiring to create more of a buyers\' market.
NAEA figures indicate the overall number of buyers has increased from 282 per estate agent in October to 290 in November, which the organisation said is a signal that after the credit crunch and the subsequent economic uncertainty, the emergent buyers\' market \"is luring some potential purchasers back in\".
Most significantly of all, the proportion of first-time buyers was up in November, comprising 10.1 per cent of the market compared with 9.2 per cent a month earlier. While this was still down on the 13.4 per cent figure of 12 months earlier, the NAEA described the development as \"encouraging\".
Affordability may also have improved slightly, with the gap between asking prices and final price being 4.2 per cent now, compared with 3.1 per cent, indicating that buyers are now in a stronger bargaining position.
Add to this the recent interest rate cut and the expectations that more are likely to follow soon and the picture begins to look brighter for those looking to get on the property ladder. If predictions such as that of Nationwide for zero house price growth in 2008 are fulfilled, the affordability situation will improve further.
Yet as Martin Ellis put it, there is \"no quick fix\" to the problem, while NAEA president Stewart Lilly said the news was merely \"light at the end of the tunnel\" rather than a brave new dawn.
Trends indicating an improvement in the first-time buyer situation only suggest that the situation is starting to get better, not that it is solved. Thus in 2008 buy-to-let landlords should still expect to find a large market of would-be first-time buyers looking for rented accommodation while so many houses continue to remain out of reach.
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2025
