First time buyers not able to get on the first rung of housing ladder: Nationwide |
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Published
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Tue, 20 Jun 2006 10:20
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LONDON - The latest report by Nationwide Building Society says that first time buyers still make up 40 percent of all housing transactions but young first time buyers are no longer able to get onto the first rung of the housing market.
The report on 'first-time buyer affordability' also says that the UK housing market is being boosted by "returners" who are the first time buyers who spent the last few years in rented accommodations. These people now have the wherewithal to spend substantially for their homes. Nationwide says that "returners account for one in five first-time buyers."
The concern in the report is that the proportion of young, first time buyers n the 20-24-age bracket, are unable to get any footing in the housing market. Around 34 percent of buyers in 1994 were in this age bracket, while the figure fell to 20 percent a decade later. Nationwide observed that the biggest barrier for younger people was the inability to secure a mortgage.
"No longer can we think of first-time buyers as the fresh-faced young person or couple," said Fionnuala Earley, Nationwide Group economist. "Rather the category includes a significant proportion of buyers returning to the market...such buyers often have access to deposits funded from past increases in house prices."
Mortgage lenders currently lend only at 3.1 times income and this is proving a deterrent for younger people. "Overall it is not the financing of the loan that is the biggest obstacle to the fresh-faced first-time buyer – rather it is finding the deposit necessary after the income multiple constraints," Ms Earley added. "For many true, and particularly young, first-time buyers, the deposit and income multiple constraints are too strong and prevent them entering home ownership at all."
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