by Mark Johnston
Restricted lending by Banks and Building Societies, Government cuts, food and fuel inflation together with widespread job losses up and down the country are all playing their part in making the dream of owning a home in the UK more difficult. They are expecting further falls in house prices when though on average the cost of a house in the UK has dropped by around £4,000.
Even as recent as last year the price of the average house was around 3% more than it is today. Then average home in the United Kingdom now costs £162,657 according to the Halifax who track the mortgage market using their mortgage figures.
The outlook is pretty bleak for both home owners and those looking to buy their first home. Britain’s biggest lender the Halifax is already warning that they expect prices will fall further.
One of the main issues at the moment is the availability of affordable mortgage. The base rate may be just 0.5% and there are lots of good deals on the market but the with lending criteria’s so strict it’s hard for first time buyers to secure a loan. The average loan to value for a decently priced mortgage is around 75% which means first time buyers would need to save a deposit of around £37,500 before they could even think about moving into their first home. Even loans on the lower end of the market would need upwards of £20,000 which is the annual salary of most people in the UK.
The lack of affordable mortgages for first time buyers together with the impact of a struggling economy and widespread government cuts, many first time buyers are giving up on their dream of owning their home.
Martin Ellis, a housing economist at Halifax, said: “Overall, we expect a modest 2 per cent decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year. Fewer properties have been coming onto the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.”
That said, Howard Archer, an economist at Global Insight pointed out that it would be difficult for things to turn around when he said: “Even if fewer houses do come on to the market over the coming months though, this is likely to be countered by ongoing low housing market activity reflecting the pressure on buyers.”
Jennifer Warner from Globrix.com a leading property website that sponsored the research said: “Many young people who want to get on the property ladder have accepted that they will be much older by the time they finally do. A significant portion have given up the dream altogether. What we’re seeing is a major generational shift towards the realization that buying your own home will be an elite rather than a mainstream lifestyle choice in the coming decades, and to a large extent only those with wealthy parents who can contribute towards a deposit will be able to buy a place of their own.”
Ms Warner went on to say: “Many young people already accept renting as a long-term alternative to buying, and with average university debt set to increase significantly over the next few years we can only see this trend strengthening.”
Related stories to : Britains Are Giving Up on Dream of Owning Their Own Home