First time home buyers across the UK are facing high upfront costs in the form of initial deposits. Increase in house prices and high borrowing costs have reduced the number of people entering into the housing market.
London (Ask4loan) December 26, 2007: The Halifax review that tracks housing affordability in 483 towns across the UK reveals that an average house has become unaffordable in 466 of them. A town is classified as unaffordable if its House Price/First Time Buyer household income ratio is above 4.0.
In the recent past, mortgages and secured loans all over the UK have become costlier. First time buyers who were already facing the brunt of high house prices are now virtually driven out of the market due to high borrowing costs. The effect of global credit crunch on the local financial markets has raised the overall cost of borrowing.
On an average, a first time buyer paid £175,093 for a house in 2007. The average house price for first time buyer has increased by 82 per cent over the past 5 years. Even the initial deposit required for buying a house has increased in the past 5 years by around 88 per cent. In 2007, the average deposit paid by first time buyer was £34,381 compared to £18,259 five years back.
Martin Ellis, chief economist at Halifax, said that rising property values have priced many potential first time buyers out of the housing market and when they do enter the market, these buyers are likely to be in their thirties rather than their twenties and buy a flat rather than a terraced house. However, a relatively subdued housing market predicted over the next few years is a positive step for potential new entrants.
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