UK Property News - December 2005

Figures released in June reveal that first-time buyers are taking on average nearly five years to save for a deposit on their first property purchase. 9 out of 10 homes are too expensive for the average income of first-time buyers, with rising house prices leaving many stranded in rented accomodation. House prices have continued to exceed both savings rates and incomes over the last year. This has resulted in first-time buyers having to begin saving earlier and harder to get into the housing market.

First-time buyers once accounted for between 45 - 55% of the total UK mortgage market, but this has dropped to less than 30% recently. They are an important factor for the health of the housing market and the economy.

Shared equity scheme

Earlier this year, the government revealed more details of their scheme to help first-time buyers to climb onto the property ladder. The new five-year plan aims to help up to 100,000 first-time buyers by building affordable houses on surplus NHS sites, and then selling the properties at a subsidised rate.

First-time buyers should be able to purchase 50 - 75 per cent of the property, with the government or local housing association owning the rest. First-time buyers would then pay a 'rent' (no more than 3%) on the rest of the property, and have the option eventually of buying the whole property.

The government initiative is specifically aimed at enabling young people and 'key workers' - those in lower-paid sectors such as teachers and nurses - to buy their first homes. The amount of savings needed for their first property purchase will also be reduced.

Prospective buyers are becoming encouraged by the relatively low cost of borrowing, and confidence is growing that the property market is beginning to stabilise after a 'soft landing' rather than the once feared property price crash. The strong UK economy and the lowest unemployment figures for three decades make home ownership a main priority to most people.

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