Who is the Typical First Time Buyer?

This article by Alex Johnson of The Independent on September 9th, 2013 basically identifies the percentage of the typical first time buyer according to age, salary, house type, property value, etc.

According to the latest figures from LSL Property Services, the average first-time buyer in
July was aged 30, with an annual salary of £36,299, 4 per cent higher than in July 2012.

The average purchase price for a first-time buyer rose by 8 per cent year-on-year in July, and is now £146,726.

The number of first-time buyers who were able to self-fund their purchase fell to 41 per cent in July, from 51 per cent in April. Around 36 per cent of all first-time buyers in the UK received financial help with their deposit from parents or relatives, while 9 per cent benefited from an inheritance - 2% received family help with mortgage repayments. Another 4 per cent received financial help from a government scheme such as Help to Buy, up from 1 per cent in April.

A total of 44 per cent of all first-timers were looking for houses with three or more bedrooms.

The second most popular property type was two bedroom houses (31 per cent). Flats continued to attract far fewer first-time buyers with just a quarter of buyers looking for flats rather than houses.

Four in ten first-time buyers said they were choosing to buy now as they had only recently been in  a position financially stable enough to purchase a property, while a quarter chose to buy to own a house with their partner, and another quarter feel it is time for them to settle down. Only 8 per cent bought for investment purposes,  expecting house prices to rise, down from 11 per cent in April.

First-time buyers are also confident that the value of property is set to rise. Almost half  of UK first-time buyers think that house prices will rise by up to 5 per cent in the next year, while a further two in ten believe prices will rise between 5 per cent and 10 per cent.

Connells also reported that the number of first-time buyers in August 2013 outpaced those recorded in August 2007. There were 40% more first-time buyers last month than in August 2012 and 1% more than August 2007.

John Bagshaw, Corporate Services Director of Connells Survey & Valuation, comments:

"Numbers of first-time buyers are flowing again, but it isn’t like the floodgates have been thrown open for everyone.  There are still thousands of households whose earnings have little chance of matching inflation – let alone being sufficient to support loans based on current house prices.  The other side of the story to first-time buyers are those still renting, and buy-to-let activity is still growing at an astounding pace to keep up with demand for renting."

In the LSL survey, tenants currently unable to become first-time buyers named the inability to save for a deposit as the biggest stumbling block to homeownership. More than half are unable to buy as they can’t save for a deposit, and a growing number of potential first-time buyers (19according to chartered surveyors Connells Survey & Valuation) are concerned that rising costs like stamp duty will get in the way, up by a third from 13according to chartered surveyors Connells Survey & Valuation in December 2012.

David Newnes continues: “It remains a huge challenge for first-time buyers to purchase property in the capital. House prices are more expensive, and the size of deposit required dwarfs that in the rest of the country. It’s the reason why six out of tenants in London can’t afford to buy. And there are further concerns for the London market. Higher legal fees and stamp duty costs are turning further first-timers off buying."

Article Source: http://www.independent.co.uk/property/who-is-the-typical-first-time-buyer-8804580.html

House Prices Rising at Their Fastest Rate for 3 Years

According to these data and figures from Halifax the average property shot by 5.4% in the three months to August compared with the same time last year as shown  on this article by Mirror on September 7th, 2013.

House prices are rising at their fastest rate for three years, new figures have revealed.

Data from the Halifax showed the average property shot up by 5.4% in the three months to August, compared with the same time last year.

Prices rose by 0.4% in August alone – the seventh consecutive monthly rise, leaving the average home worth £170,231.

Experts say the pick-up in property prices has been fuelled by a flood of cheap finance, boosted by the Bank of England’s Funding for Lending scheme and the Government’s Help to Buy initiative.

Rock-bottom mortgage rates led to a 45% jump in first-time buyers in July, a report earlier this week found.

But critics warn the latest leap in prices is creating another housing bubble that is excluding many people from the property market and lumbering borrowers with large debts.

Halifax housing economist Martin Ellis said: “Overall, house prices are expected to rise gradually over the remainder of the year.”

Halifax’s report follows similar findings from building society Nationwide last week that the housing market revival is gathering pace.

Bank of England governor Mark Carney recently addressed concerns that Government stimulus ­measures risk stoking another property bubble. He said the Bank is “acutely aware” of the potential threats and said action will be taken to clamp down on mortgage lending if needed.

Matthew Pointon, property expert at Capital Economics, said the imbalance between demand and the supply of homes for sale is likely to subside gradually, which will reduce the upwards pressure on prices.

He added: “The rise in wholesale interest rates seen over the past few weeks may soon start to feed through to mortgage rates, dampening demand.”

Comment by Campbell Robb, Chief Executive, Shelter

Some people might cheer as house prices rise again, but not England’s 1.8 million forgotten families.

That’s the number of working families in this country who are taking home between £20,000 and £40,000 – but are still priced out of a reasonable home of their own.

In the past, they would have been able to put down roots in a home they own or in social housing.

But now, their reality is often expensive private renting, where they can find themselves trapped on a merry-go-round of one six-month tenancy to the next. Shelter’s advisers see families like this every single day.

Many simply won’t be able to afford high monthly mortgage payments, thanks to rising house prices.

And Government mortgage guarantees won’t help – because it means borrowing more, and paying higher costs each month.

The root of the problem is that we need more homes that people can afford.

Until we do, the simple laws of supply and demand will keep pushing prices higher.

If we want to give hope to forgotten families, celebrating high house prices won’t help. We need to build more homes.

Article Source: http://www.mirror.co.uk/money/personal-finance/house-prices-rising-fastest-rate-2257130

Adult Children Live with Their Parents at Home as Rents and House Prices Rise

This alarming article by Tanya Powley of Financial Times on September 6th, 2013 reveals grown-up children are still living at home with their parents because getting on to the property ladder is increasingly difficult as rents and house prices rise.

“Empty nest” syndrome has become a problem of the past for millions of parents who have adult children in their twenties and early thirties still living at home.

The trend of young adults returning to live in the parental home – generation boomerang as they have been called – has grown in recent years, as rents and house prices have risen further out of the reach of would-be homeowners.

Three in ten parents have at least one child aged between 21 and 40 living at home, according to a survey published by the National Housing Federation on Friday. Two-thirds of these parents said their child could not afford to move out.

The poll, which surveyed more than 1,100 parents, highlighted the emotional and financial burden parents face and why the returning offspring have been given another nickname: Kippers – kids in parents’ pockets eroding retirement savings.

One in five said having a grown-up child at home had caused them stress, while a further fifth said it had given rise to family arguments.

“Moving out and setting up a family home of your own is a normal rite of passage,” said David Orr, chief executive at the National Housing Federation. “Yet as rents, mortgages and deposits continue to soar out of reach, it is no longer an option for many.”

Official figures show the number of young adults living at home has jumped by 20 per cent since 1997. According to the Office for National Statistics, almost 3m Britons between the age of 20 and 34 now live at home – of which 1.8m are men.

Amanda Lightstone, a 57-year-old dental nurse, has her youngest son, Andrew, 25, living with her in her three-bedroom house in Edgware, northwest London. She has already lent more than £100,000 to her older sons to help them buy their homes and said she will do the same for her youngest.

“How will he save for a deposit if he starts renting? He will live at home for quite a few years – he’ll be more than 30 when he can afford to buy his own place. I will just have to delay my retirement plans, you can’t have everything!” said Ms Lightstone.

Ann Berrington, professor of demography at the University of Southampton, said the percentage of young adults in their twenties living with their parents has increased since the recession.

Her analysis of the 2008 and 2012 UK Labour Force Surveys found the percentage of women aged between 21 and 22 living at the parental home rose from 46.4 per cent to 55.6 in the four years to 2012.

“The lack of affordable housing is clearly a factor as well as having to raise bigger deposits, but there are other factors at play,” said Professor Berrington.

While research published on Friday showed that in July the number of first-time buyers was at its highest since November 2007, according to LSL Property Services, transaction levels are still significantly lower than at the peak of the housing market.

Local government department figures published on Thursday showed that the government’s housing schemes, which aim to make it easier for people to buy a home with just a 5 per cent deposit, have made little headway.

According to the government, 3,749 people have bought a home through its NewBuy scheme launched in March 2012. This equates to less than 5 per cent of its 100,000 target. The second part of the scheme has had a bigger impact, with 3,000 sales and 10,000 reservations since April 2013.

Paula Higgins, chief executive of the HomeOwners Alliance, said: “We haven’t been building enough houses for 30 years and this is a real embedded crisis that’s not going to go away.”

Article Source:  http://www.ft.com/intl/cms/s/0/eb71071c-163e-11e3-a57d-00144feabdc0.html#axzz2e596ach1

Almost 2 Million UK Would Be Homeowners Can’t Get on Property Ladder

New research suggests that almost two million would be homeowners in the UK, mostly families, can't get on the property ladder because they can't afford to save for the deposit needed, according to this September 4th, 2013 recent article by the Property Wire.

According to housing charity Shelter around 1.8 million families face a life time of renting a home with three quarter priced out of the market and even with the government’s flagship Help to Buy scheme some 78% are unable to afford the repayments on a family sized home.

In contrast, the report finds that mortgage repayments on a shared ownership home would be affordable for 95% of families on low or middle incomes.

The charity is calling for a major new house building programme of shared ownership homes to revolutionise ownership for what is describes as ‘forgotten families’. This would allow families to find an affordable home of their own, and provide a real alternative to the confusing postcode lottery of existing small scale schemes, or the overheated private rental market.

The report says that investing £12 billion, less than 1% of GDP, could build 600,000 new shared ownership homes which would be enough to give almost half of England’s private renting families the chance to own their own home. 

‘We need to see a new generation of shared ownership for the ordinary families priced out of home ownership. The reality is that soaring house prices mean that the traditional market is no longer working for ordinary people,’ said Kay Boycott, director of campaigns and policy at Shelter.

‘Building the new shared ownership homes we desperately need is the only way to give thousands of families a stake in the stable home they want at a price they can afford,’ she added.

But the government says it is doing more to help families onto the housing ladder. As well as schemes like Help to Buy and Funding for Lending, both credited with boosting the number of first time buyers, it points to the fact that it has also launched a new scheme to bring back empty homes into the housing stock.

It is working with the public and private sector through the National Empty Homes Loan Fund (NEHLF) to give borrowers access to a secured loan at a fixed 5% interest to renovate some of the 710,000 empty homes in England.

A joint £3 million initiative has been launched with the charity Empty Homes, the Ecology Building Society and 39 participating local authorities to help home owners who cannot afford to bring the property up to a useable standard.

The Ecology Building Society, a specialist mortgage lender that supports sustainable communities, said that it should provide funding for hundreds of properties and is available to individuals aged 18 and over who own a property that has been empty for six months or more. 

‘We know that many homes are empty because it is difficult for owners to raise the money that is required to bring them back up to a habitable standard. This initiative will kick start efforts to tackle this. This scheme is a first in England and is a great example of central government working together with the public and private sector to try and reduce the number of empty homes in the UK,’ said David Ireland, chief executive of Empty Homes.

Paul Ellis, chief executive of the Ecology Building Society, said that at a time when there is increasing demand for homes but an acute lack of supply it makes sense to bring new life to existing but neglected properties.

Article Source:  http://www.propertywire.com/news/europe/uk-property-ladder-families-201309048193.html

Prices on Climb Amid Strongest Market Conditions for Six Years in UK

The market is in its best shape since the financial crisis as demand continues to outpace the number of homes for sale, adding to values, according to this recent article by South China Morning Post on September 4th, 2013.

British house price growth accelerated last month amid the strongest market conditions for six years as demand continued to outpace the number of homes for sale, Hometrack said.

Average values in England and Wales rose 0.4 per cent after a 0.3 per cent gain in July, the London-based property researcher said. Prices were up 1.8 per cent from a year earlier, the most since July 2010.

In a separate report, the Engineering Employers' Federation raised its forecasts for UK economic growth and manufacturing output.

Hometrack's survey adds to evidence of a mini-boom in the housing market, with reports last week showing values rising and mortgage approvals at their highest since 2008.

Bank of England Governor Mark Carney said he was alert to risks from the property market and policymakers would act if signs of a bubble emerged.

Richard Donnell, director of research at Hometrack, said: "A lack of housing for sale is set to remain a feature of the market and this will keep an upward pressure on prices in the near term.

"We expect demand to continue to expand over the remainder of the year so long as the outlook for the economy and mortgage rates remains unchanged."

Underlying market conditions are at levels not seen since the financial crisis, with the average time taken to sell a property falling to 8.1 weeks and sellers achieving 94.6 per cent of the price sought last month, Hometrack reported.

New buyers registering with real estate agents to browse property rose 1.1 per cent, the same as in July. Demand fell in August in each of the last three years. Growth in new property listings slowed to 0.8 per cent from 2.4 per cent.

Seven of the 10 regions tracked by Hometrack showed price gains, led by a 0.9 per cent increase in London. Two regions showed no change while values dropped 0.1 per cent in the northeast.

Signs of economic growth have lifted consumer confidence. The economy expanded 0.7 per cent in the second quarter, and recent data suggests the recovery is gaining traction.

A survey by the manufacturers' organisation EEF and the accounting firm BDO showed manufacturing output rose to a three-year high in the third quarter, with a gauge of production rising to 32 from 12.

A measure of investment intentions rose to 24, the highest in six years.

The group raised its forecast for manufacturing growth next year to 2.1 per cent from 1.9 per cent, following a 0.5 per cent contraction this year.

It also raised its forecast for UK gross domestic product growth to 1.2 per cent this year and 2 per cent next year, versus earlier projections of 1.1 per cent and 1.8 per cent.

"Industry's prospects have brightened considerably," said Lee Hopley, chief economist at the EEF. "There is growing confidence that improving trading conditions will continue into the final months of this year and then accelerate through the gears in 2014."

Nationwide Building Society said last week that home prices rose 0.6 per cent last month and the Bank of England's commitment to maintain record-low interest rates until at least the end of 2016 may be helping to support demand.

Article Source: http://www.scmp.com/property/international/article/1302634/prices-climb-amid-strongest-market-conditions-six-years-uk

Deposits Fall and Home Affordability in the UK Improves

According to the new research from Lloyds TBS, the average deposit put down by home owners in the UK in 2013 was £70,540, just 6% higher than a decade ago as as shown on this September 2nd, 2013 article by the Property Wire.
 
The research report says that the average age of a home mover is 40 and affordability for second steppers, that is those moving to their second home, has improved over the last year but fallen over the last decade.

The research also shows that since 2008, the average price paid by a home mover has fallen by 10% from £235,078 to £212,586 in 2013. Nationally, home mover property prices grew by 3% in the past year.

Not surprisingly home movers in London, where prices have been rising faster than in the rest of the country, put down the largest average deposit at £126,528 or 34% of the average property value. This is close to three and half times the average deposit put down by home movers in Northern Ireland at £36,912 and the lowest in the country.

The average mortgage advance for a new home mover is £142,046, a quarter higher than a decade ago when it was £101,472.

With the average age of a home mover now at 40 years old, this has increased three years since 2002 when it was 37 in 2002. Most of the increase in buyer age has occurred since 2007.

Typical mortgage payments for a home mover, that is those already in the housing market, stood at 31% average gross disposable earnings in the second quarter of 2013. This has come down sharply from an all time peak of 52% in 2007. This improvement has been due to a reduction in both mortgage rates and house prices.

Housing affordability for second steppers, calculated as the average price of a typical second stepper home less their current equity position, stood at 4.4 times gross annual average earnings in June 2013 compared with a ratio of 4.9 in June 2012.

A typical second stepper's current equity position accounts for 13% or £21,200 of the price of an average second stepper home, a rise from 1% in 2012.

Although the position has improved for those looking to put down a deposit on a new home, for some potential second home movers this may still not be sufficient to put towards a deposit when also taking the cost of moving into account.

‘Housing affordability for the typical second stepper has improved in the past year.

Nonetheless, there are many potential second steppers who are still in their first home which they bought in the run up to and at the peak in house prices in 2007. Many of these home owners may still be unable to move due to having either very low, or negative, equity in their homes,’ explained Nitesh Patel, housing economist at Lloyds TSB.

‘The lack of equity for many home owners in their existing home largely explains why the number of home movers in the first six months of 2013 was broadly unchanged compared with a year earlier in sharp contrast to the number of first time buyers growing by close to 20% over the period,’ Patel added.

The report also reveals a considerable variation in housing affordability between regions, with northern regions more affordable than southern regions for second steppers. This is largely a reflection of the lower prices for second stepper properties in the north. The West Midlands and East Midlands both at 3.1, are the most affordable regions for those in their first home looking to take their next step on the property ladder. While London at 5.7, the South West at 4.6 and the  East at 4.5 are the least affordable.

Article Source: http://www.propertywire.com/news/europe/uk-property-deposits-afford-201309028183.html

Buying a Holiday Home is a Huge Waste of Money

This engaging article was posted in Yahoo Finance UK and Ireland on August 30th, 2013 suggests reasons not to consider buying a holiday home because it is the biggest waste of money ever.

As millions of us come back from holiday, many will dream of owning a home in the sun - crazy property-struck fools that we are.

Right now, 5.4 million Britons are considering buying abroad, according to HSBC, even more than before the financial crisis. Have we learned nothing?

Spain and the Balearic Islands are the top dream destination, attracting 30% of buyers, followed by France at 16%. Italy, Portugal, Greece, Cyprus, the Caribbean, Florida and Turkey are also dream home hotspots.

If you've been seduced by dreams of a place in the sun, here's a measured word of warning. You've lost your mind, because buying a holiday home is the biggest waste of money ever.

Twice yearly, really

Before you protest, you happy holiday homeowners, here's the proof. The average owner visits their holiday or second home just twice a year, according to new research from household insurer Schofields.

They didn't plan it that way. Two-thirds expected to visit their bolthole far more when they originally bought it, but never get round to it.

Work, family commitments and lack of cash were the main reason people leave their holiday homes empty and forlorn, although an entrepreneurial 17% said they did so to maximise guest bookings.

Sun-baked and half-baked
 

A holiday home is an alluring dream. I regularly find myself browsing Spanish property websites to see how far prices have fallen, and whether they have fallen enough for my budget.

Prices are lower, skies are bluer. What's not to like?

But like most dreams, it eventually bangs its head against hard reality. The truth is, you've got too many other things to do.

Curse those jobs and families.

Bills, not thrills

You won't get to that holiday property as often as you like, but you will keep paying for it. 

First, there's the purchase price. Yes, Spanish holiday home prices have fallen more than 30% in the last five years, but you're paying in sterling, which is also down 20% against the euro.

Then there are local property taxes, legal fees, mortgage administration charges, and that's only the beginning. Your expenses don't stop when you exchange contracts, they're just getting started

You have to furnish your exotic new financial liability. Do it up. Pay for insurance. Carry out maintenance and repairs. Cover utility bills. Pay local taxes. You may have to hire a cleaner or stump up a monthly service charge.

And that's before you factor in the cost of actually getting to your property (although that won't be so expensive, as you're only going to visit twice a year).

X-rated expat tales

Plus there's always the chance you will end up buying the holiday home from hell, and lose everything. I recently spoke to British expats whose Andalusian retirement dreams were destroyed in an instant when the local police called to explain, not very politely, that they were the proud owners of an illegal home.

Nobody told them, not even their lawyer, that the developer hadn't got planning permission. 

Some lost hundreds of thousands of pounds. Several in the Valencia region saw their home torn down before their very eyes, without compensation. Others are stranded in the deserts of Murcia, with no running water or electricity.

Expat pain isn't restricted to Spain. Thousands of British homeowners in Cyprus risk losing both their holiday home and their UK property, in a vicious legal dispute over mis-sold mortgages.

I asked one couple, who were waiting to hear if their home in Almeria would be torn down, what advice they would give to the current generation of Spanish property buyers.

Their answer was succinct: "Forget it. Stay at home or go elsewhere."

Oh, I give up

Well, I've tried. I've done my best to make you see sense. It won't work. You still dream of a place in the sun, and in my dafter moments, so do I. So how do we make it match up to reality?

Before you go any further, ask yourself these questions:

1. Do you really want to go to the same place on holiday, year after year? Can you afford the flights? Do you have the time? Don't you want to see the rest of the world?
2. Even if you do want to go to the same place, wouldn't it be easier and cheaper to rent a holiday home instead, or stay in a hotel?
3. Can you afford all the costs of running a holiday home, including mortgage, insurance, maintenance, repairs, service charges and taxes, not to mention those twice-a-year flights?
4. Have you done your research? Do you know what similar properties are selling for? Is the local council planning to build a municipal waste incinerator in your backyard?
5. Is that bargain property really a bargain? Cheap isn't always cheerful, especially if you're stranded in a half-built complex a mile from the nearest communal water pump, or squeezed between the autoroute and municipal tip. Location, location, location are key words in any language.
6. Have you taken the right advice? You must appoint an experienced English-speaking lawyer, with no connections to your seller, estate agent or property developer, to avoid conflicts of interest.
7. Is your property legal? Your lawyer must confirm you have got all the necessary planning permission, licenses and consent. You must also pay for an independent valuation, even if buying in cash.
8. Is your mortgage in the right currency? If you earn your income in pounds, but your mortgage is in euros, you are at the mercy of currency swings, as many expats discovered when the pound collapsed after the financial crisis.
9. Are prices still in freefall? Spanish house prices could still plunge another 25%, according to newsletter Spanish Property Insight.
10. Do you plan to retire there? Visiting your property twice a year makes a lot more sense if you plan to stay for six months each time.

So what do you think? Do you still want a place in the sun?

Article Source: http://uk.finance.yahoo.com/news/buying-holiday-home-huge-waste-082409006.html