Posts filed under ‘First Time Buyers’
The average property price paid by first time buyers hit a two-year high in September, as starter homes outperformed the rest of the market, research showed today.
The typical cost of a first home soared by 4.1 per cent during the month to stand at £160,218, according to estate agent haart.
But house prices eased across the wider property market as the supply of homes for sale increased, but demand fell.
There were 2.8 per cent more homes put on the market during September than in the same month of 2013, the fourth consecutive month during which supply has increased on an annual basis.
At the same time, the number of new buyers registering with estate agents fell by 6.6 per cent, also the fourth month in a row in which demand has eased year-on-year.
The change in market dynamics led to the average cost of a British home dipping by 1.1 per cent to £203,135, while in London prices dropped by 3.3 per cent to stand at £507,967.
But house price gains remained robust on an annual basis, with prices 6.9 per cent higher than they were a year ago across Britain as a whole, while in London they were a massive 19.8 per cent up.
Despite the easing in the mismatch between supply and demand, competition for homes remained intense, with an average of 10 buyers chasing every home for sale, rising to 16 potential buyers per property in London.
Paul Smith, chief executive of haart, said: “Although our data shows a small slowdown in house price growth on a monthly basis, this must be taken in the wider market context.
“Good mortgage deals are still very much on the table and interest rates aren’t going up for the foreseeable future.
“We have 10 buyers chasing every new property instruction UK-wide, so sellers shouldn’t start sneezing yet. The run up to Christmas has already begun and the market remains strong.”
Property sales increased by 1.8 per cent during the month, to stand 7.2 per cent higher than in September 2013.
But the number of first time buyers registering with estate agents fell by 6.4 per cent compared with a year ago.
People taking their first step on the property ladder put down average deposits of £34,550 during the month, while they borrowed an average of £125,668.
On a brighter note, this group accounted for 44.7 per cent of all mortgages advanced in September, slightly up on 41.1 per cent 12 months earlier.
Today’s figures add to growing evidence that the booming property market is beginning to cool.
Nationwide Building Society said house prices dipped by 0.2 per cent in September, while Halifax said annual house price inflation may have peaked at 10 per cent.
There are nearly 10 buyers chasing every property for sale, despite a jump in the number of homes on the market, research showed today.
The number of properties listed with estate agents rose by more than 4 per cent in August, compared with the same month of 2013, as homeowners looked to cash in on recent house price gains.
At the same time, the number of potential buyers fell by 5.5 per cent, according to estate agents haart.
The group said the figures suggested the property market was rebalancing following a year of high demand and low supply.
But despite the fall in people looking to buy and the rise in homes for sale, the market remained highly competitive, with 9.5 potential buyers chasing every property.
The increase in supply helped to boost sales levels, with transactions rising by nearly 9 per cent year-on-year.
Paul Smith, chief executive of haart, said: “The property market is currently recalibrating as our data shows, with an easing of demand as new buyer registrations across the UK decrease 5.5 per cent annually, in contrast to the uplift in homeowners looking to sell.
“Despite this influx of stock the market remains competitive with an average 9.5 buyers registering interest in every new home that comes to market, which is the driver behind property price growth.”
He added: “This gradual return to normality should now dispel fears about property bubbles – which we have always dismissed as hype.”
The group said house prices had risen by 8.9 per cent in the year to the end of August, to stand at an average of £206,578.
But the typical price paid by a first time buyer actually dipped slightly during August, dropping to £153,967, 1 per cent lower than in July.
London continued to be the main driver of growth, with prices storming ahead by 23.6 per cent year-on-year in the capital to stand at £494,026.
Competition for property was most intense in London, with 15.7 potential buyers chasing every home on the market, despite a 27 per cent jump in supply.
Meanwhile, the Bank of England reported that housing market activity had stabilised at lower transaction levels, after dipping earlier in the year following the introduction of tougher lending criteria under the Mortgage Market Review.
In its Agents’ Summary of Business Conditions Report, it said the slowdown had been particularly marked in Central London, where the appreciation of sterling had deterred some foreign buyers.
It added that house price growth was also slowing, particularly in areas of the country that had seen significant gains, with estate agents saying this reflected a more balanced market, as supply increased.
The Bank’s Monetary Policy Committee also struck a more dovish tome in its September meeting, with members suggesting Britain’s recovery may slow in the fourth quarter, while risks from the problems in the Eurozone have increased.
Two members continued to vote for a rate hike, but they failed to persuade any other members of the committee that a rise in the official cost of borrowing was necessary.
Most economists expect the Bank Rate to be increased from its record low of 0.5 per cent during the first quarter of 2015.
The first time buyer is back with a vengeance. The number of people getting on to the property ladder in Britain for the first time is back to 2007 levels, after a long slump during the recession.
The twice-yearly Halifax First Time Buyer Review reported that around 144,500 first time buyers took possession of the keys to a property in the first six months of this year, up 25 per cent on 2013 levels.
Craig McKinlay, mortgages director at the Halifax, cites the generally improving economy, rising employment and the Government’s Help to Buy scheme for their return. He also notes that almost half of this year’s first time buyers managed to escape Stamp Duty by buying under the £125,000 threshold.
Naturally, this is a feat a lot easier if you live in the North West than the South East, but there are thousands of homes listed at prices on or below £125,000 on Zoopla.
Patrick Paton, of estate agents Smiths Gore in Berwick upon Tweed, says buyers could buy a two to three bedroom cottage either within the town or in the countryside around it.
He advises buyers to hone in on properties that have taken time to sell and where the owners might be open to offers. “Look for properties that have been on the market for a little while and haggle,” he said.
He also suggests considering very carefully whether taking on a run-down home makes financial sense. “Doing a property up takes time and eats into spare cash so if the property really needs a new kitchen, you might be better to spread that extra £10,000 across a mortgage by buying a property that already has a nice kitchen,” he added.
Mark Pedley, a sales negotiator at Hunters in Manchester said it is still possible to buy a one bedroom flat right in the city centre for below £125,000 – perfect for young professionals. For those prepared to for a slightly longer walk to work flats in this price range beyond the city’s ring road might also come with extras like a parking space and a balcony.
His advice to buyers is to hone in on an area poised for regeneration, and swoop while prices are rock bottom. In Manchester this could be the central suburb of Ancoats, still slightly grubby around the edges but in a convenient location and the focus for millions of pounds worth of regeneration work right now. “It is the sort of place where you might well make a profit,” said Pedley.
In Thetford, Norfolk, Mark Dickenson, director of Hudson Property Services, says buyers have plenty of choice for under £125,000. They could pick up a one bedroom flat from around £75,000 or a two bedroom flat from around £95,000. The full £125,000 would buy them a two bedroom house in the town centre.
He says buyers looking for a deal should search out areas that have been held back by poor local transport links, but where improvements are imminent. Thetford’s prices are currently low in part because the 33 mile drive along the single carriageway A11 to Cambridge is “horrendous” and can take up to an hour each way.
This winter, however, works to turn the road into a dual carriageway will be completed, slashing journey times by up to half. This, believes Dickenson, will encourage more commuters to look at the town, boosting prices. “My advice would be to get in early,” he said.
For sale for less than £125,000:
1. In Taunton, Somerset your first buy could be small but extremely stylish, not to mention pocket friendly at £53,000. This studio apartment within a grand period house, with use of a good-sized communal garden.
2. A smart two bedroom period cottage in Bolsover, Derbyshire, could be yours for £68,000.
3. First time buyers not afraid of a challenge could pick up a great dooer-upper, a potentially outstanding Georgian Grade II listed double fronted townhouse with scope to extend in Gainsborough, Lincolnshire. The property is on the market for £70,000 so there might even be enough money left to make the necessary repairs.
4. London commuters could opt for a quirky one bedroom weatherboarded cottage in Sandhurst, Kent, available at £124,950.
5. Inland Devon has some great bargains compared to the coast, like this two bedroom terrace in pretty Buckfastleigh, on the market at £120,000.
6. Commuters to Cambridge or Norwich could move to the market town of Thetford, Norfolk, and select a two bedroom house within walking distance of the town centre, for £117,000.
7. But if you want to be in the thick of things The Roof Gardens, a trendy development of flats in the very central Castlefield area of Manchester, are available from £119,000 and will be move in ready next year.
8. Even London buyers can get in on the act, although they are likely to be restricted to outer suburbs and ex-local authority flats, like this one bedroom home in Woolwich, available for £119,995.
First time buyers can typically afford to buy a property worth £130,000, limiting them currently to a choice of less than 1,500 detached houses for sale in Britain.
Latest figures from the Council of Mortgage Lenders suggests the average loan size for first time buyers is £119,000, based on the national average salary of £26,500.
The calculation behind what properties such buyers can afford is based on them typically borrowing around three times their gross income, and a minimum deposit of 5 per cent.
It follows the Royal Institution of Chartered Surveyors suggesting this week that many middle-income families will soon be frozen out of a frenzied property market.
Here are eight houses with an asking price of less than £130,000:
1. Three bedroom detached house in Pontefract for £125,000
2. Two bedroom detached house in Margate for £115,000
3. Three bedroom house in Brimingham for £129,950
4. Three bedroom detached house in Stoke-On-Trent for £125,000
5. Three bedroom detached house in Nottingham for £115,000
Two bedroom detached house in Bungay for £95,000
Two bedroom detached house near Baschurch for £129,995
Three bedroom detached house in Bradford for £115,000
Britain’s biggest lender is expected to announce the interest rates on its Help to Buy mortgage rates next week.
Halifax will offer rates under 5 per cent and accept applications by the end of the year, according to industry sources.
It will be welcome news to first-time buyers and homeowners who are looking to move with just a five per cent deposit.
As Zoopla revealed yesterday, borrowers can not only now apply for a mortgage using the new Help to Buy guarantees following the Government’s announcement at the beginning of this week, but they can also receive the mortgage money before the guarantees cut in on January 2.
It is impossible to default on the mortgage in the time between now and when the guarantees begin, so lenders are agreeing to hand over the cash before the deadline. If borrowers default after January 2, the lender will be covered by the mortgage guarantee.
A source told Zoopla: “We expect the rates to come in below 5 per cent and we expect applications to be accepted by Halifax before the end of next week.”
Under the new mortgage guarantee scheme, the buyer would only need a 5 per cent deposit.
The Government and the bank then jointly guarantees up to the next 15 per cent of the property’s value, in return for a fee paid for by the lender.
It follows the introduction of the first phase of Help to Buy – equity loans – earlier this year. Under this phase, the Government provides a loan of up to 20 per cent of the price of a property, with the borrowers providing a 5 per cent deposit and a mortgage of 75 per cent.
The scheme is proving popular with buyers as figures show registrations for new homes are up 25 per cent in a year.
Registrations for new homes climbed to almost 91,000 during the first eight months of this year, up from less than 73,000 during the same period a year earlier.
In particular, the three months from June this year – just two months after the scheme was introduced – saw a sharp increase compared to the previous year, up 15 per cent, according to insurers NHBC.
The latest news about Halifax comes as another high street lender reveals research about the biggest barriers to getting onto the housing ladder.
The survey by Santander suggested 16 per cent cite the most significant obstacle being not having enough money for a deposit.