Two new reports have highlighted the problems for first time buyers and those who bought properties at the height of the housing boom and a Leeds law firm has said there is no recovery in sight.
A report from the National Housing Federation (NHF), warns that those who bought their homes when the housing market was at its most buoyant will remain trapped in negative equity until 2014. The report shows that approximately 1.3 million bought their home in 2007 when prices were at their highest and that a significant number have a mortgage larger than the value of their property.
Home Truths 2010 also predicts a 22% rise in house prices by 2014 due to an under-supply of new housing which will affect first time buyers hoping to take their first steps on the property ladder. A separate report, from property website Rightmove.co.uk has reported a sharp reduction in the number of first time buyers, saying that of potential buyers 22% were attempting to buy their first home compared to 31% the year before. The number of first time buyers has fallen even more sharply when viewed over the last decade with 600,000 in 1999 compared to just 199,000 today.
With fewer preparing to buy for the first time there are fears that only those already rich or with wealthy parents will be able to invest in property with mortgage availability and deposit sizes deterring many. The NHF figures suggested that in some parts of the country young people would not be able to buy their first home until they are middle aged if they were relying solely on their income.
NHF chief executive David Orr said that a combination of circumstances in the market had made things difficult. He added: “The big problem that we have is that we’ve created a kind of perfect storm where there is negative equity for some people and they’re trapped and can’t move, but prices haven’t come down enough to make buying a home a realistic option for people in their 20s and 30s in ordinary jobs.”
Rightmove says that the shortage of first time buyers is causing problems for sellers concerned with finding a buyer and the market is now more reliant on previous owner-occupiers moving out of rented accommodation and getting back on the property ladder.
Jonathan Winston, managing partner at Winston Solicitors of Roundhay believes that with the country still recovering from the economic downturn, those hoping for the market to pick up will have to be patient. He said: “With talk of a double dip recession and so much uncertainty in the financial markets, along with banks reluctant to lend money to anyone, let alone a first time buyer, I can only see the housing market stagnating for the foreseeable future.”
http://www.bbc.co.uk/news/business-11124873
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