Lack of first time buyers causes problems throughout housing market
According to a recent report the lack of first time buyers entering the housing market at present is resulting in problems further up the chain, with homeowners who are already in starter homes unable to sell up and move to larger properties due to lack of demand and poor house sale performance. The housing market has seen a real slump in sales figures, and many people have found that they cannot sell their homes because first time buyer numbers have dwindled.
Figures show that there were 600,000 first time buyers entering the market in 1999 at the start of the housing boom, but by last year this figures had fallen to almost half of this level. It is through that the figure will continue to fall, as first time buyers are finding it increasingly difficult to get onto the property ladder. This is partly due to the global credit crunch, which has resulted in lenders demanding higher deposits from first time buyers, which many cannot afford, as well as increased interest rates for new borrowers, tighter lending conditions, and higher arrangement fees.
Whilst many thought that falling property prices would be good news for first time buyers, who have struggled to afford a property over recent years, it has also fuelled a drop in the number of buyers entering the market. This is because further property price falls are predicted over the course of the year, and many are worried that if they purchase a property now the value will continue to fall, which will leave them in negative equity.
One CML official said that the problem is mainly due to lack of mortgages, stating: “We don’t see this as a demand-led reduction but a funding problem. At the moment it’s still seen as very much a supply-side problem.”
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- House price predictions changed by Halifax
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I too am looking for my first home and can’t find any mortgages that will accept my application. My credit is fine, I just don’t have any deposit as I need all my money for repairs and household goods – it is so expensive!