The housing market remains mired in recession because seven in 10 first-time buyers have given up hope of ever owning their own homes, a leading property analyst said today.
Peter Bolton-King, a former head of the National Association of Estate Agents, accused the Government of doing little to help first-time buyers into the market and at the same time undermining the chances of a housing recovery. “With banks still refusing to lend and the Government doing practically nothing to help first-time buyers, it’s little wonder so many people have given up hope of every owning their own home,” said Mr Bolton-King, now chief executive of the National Federation of Property Professionals.
“First-time buyers are the bedrock of a healthy housing market. It’s a real shamethat Alastair Darling missed an opportunity to help them by extending the stamp-duty holiday to the rest of the market and by scrapping home information packs. In failing to do that, he dashed the hopes of thousands of hard-working people who are saving in the hope of getting the keys to their own home.”
He was speaking following the publication of research by PropertyLive.co.uk. an internet-based property service. It said that while the cost of mortgage finance had fallen to a record low in line with the Bank of England’s decision to cut the base rate of interest to 0.5 per cent, lenders require such large deposits to grant home loans, that the first rung of the property ladder remains out of reach of the majority.
The typical deposit required by a lender is currently 25 per cent, compared with about 11 per cent this time last year. At the height of the property boom in 2007, mortgages of more than 100 per cent were being offered to first-time buyers. Despite a recent rise from their nadir, mortgage approvals are running at very depressed levels.
The website’s survey shows that 65 per cent of would-be first-time buyers in the UK believe they will never be able to afford their own home, with the figure rising as high as 92 per cent in certain parts of the UK. Even among those people who do expect to eventually buy their own homes, only 15 per cent think they will be able to make the purchase in the next two years.
The Nationwide Building Society index showed UK house prices fell by an average of 0.4 per cent in April, taking the annual rate of decline to 15 per cent. However, house prices in relation to earnings are still at historically very high multiples. Analysts at Moody’s said: “Despite lower mortgage rates, tight credit conditions and rising unemployment will weigh heavily on theUKhousingmarket through 2009.”