by Mark Johnston
Homes in the South are Becoming Unaffordable!
New data from the Office of National Statistics (ONS) has showed that house prices are rising faster than the rate of inflation.
It seems that buyers are still facing a marked north south divide in terms of affordability.
The rise in house prices in southern England has left new home buyers competing for a tiny number of properties, new data show.
For instance In Chichester, West Sussex, a mere 11 per cent of homes have recently been classed as “affordable”.
A house was deemed unaffordable if the price, less a 25 per cent deposit, was more than 2.75 times a couple’s joint salary.
Figures from the Council of Mortgage Lenders (CML) suggest that prices in the capital rose 6.9 per cent between April and June this year compared with 2.9 per cent for the UK overall.
Rather than giving more people access to the property market, this could stifle potential first time buyers and those moving up the property ladder, according to trade body Intermediary Mortgage Lenders Association (IMLA).
Some industry experts believe that house prices will rise by around 11 per cent over the coming three years thus potentially pushing home ownership out of reach for millions of young people.
Therefore, first time buyers in London are being forced to put down record deposits due to rising house prices.
Figures released by the Council of Mortgage Lenders (CML) reveal that first time buyers in London are putting down a record £64,000 average deposit to get on to the property ladder.
Teresa Richardson, assistant director of the National Housing Federation (NHF), suggested that “England is facing ‘a housing crisis of huge proportions. A whole generation is at risk of being priced out of home ownership forever.”
New research has also suggested that by 2020, the average deposit required for a first home will be more than £60,000 and in London it will top £100,000.
Despite this fact current data has shown that in London, first time buyers made up 56 per cent of all house purchases, while across the UK that proportion was lower at 46 per cent.
However, first time buyers desperately trying to step on the property ladder before prices shoot out of reach are being helped by record low mortgage rates.
Lenders have been slashing rates in recent months following the government’s Funding for Lending scheme.
Brian Murphy, of the Mortgage Advice Bureau, said: “Although property prices are on the rise, competition between lenders has opened up the market for first time buyers, with growing product choice and competitive rates.”
This said it appears that many first time buyers are now spending 20.8 per cent of their income on mortgage payments, which is almost unchanged from the 21 per cent recorded in the first three months of this year.
First time buyers in the capital borrowed an average of 3.67 times their income, compared with 3.30 nationally.
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