First-time buyers endure massive 120% house price rise
Published by Anonymous for 24dash.com in Housing and also in Finance
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House prices paid by first-time buyers have soared by more than 100% since 2001, a new report has revealed.
According to the Chartered Institute of Housing’s UK Housing Review 2014, the average price paid by FTBs has risen by 120%, from £85,021 in 2001 to £189,668 in 2013,
Meanwhile, the cost of the average mortgage for FTBs has risen by 110% in the same period.
And wages have failed to keep pace with the increases, with the average income rising by just 164%.
Last year, the average mortgage for FTBs was just over three times the average person’s income.
The CIH's study also shows that aspiring homeowners are struggling to secure mortgages, with only 268,000 loans approved in 2013 compared with 568,000 loans secured in 2001.
However, the approval rate is an improvement on 2008's figure, when, at the height of the credit crunch, only 192,000 mortgages went through.
FTBs spent 17.8% of their income on mortgage repayments last year compared with 16.7% in 2001 – but that figure could change drastically if interest rates rise as average rates in 2013 were only 3%, the CIH has warned.
It means that any increase in the Bank of England base rate could have a big impact on FTBs’ ability to meet their mortgage repayments.
CIH chief executive Grainia Long said: “With house prices outstripping wages, home ownership is becoming increasingly unaffordable for the millions of people across the UK trying to take their first step on the housing ladder. Many are being priced out altogether, meaning younger generations are being denied the opportunities enjoyed by their parents and grandparents.
“It is not just homeownership – people living in the private and social rented sectors are also suffering the results of a chronic shortage of affordable housing across all tenures.
"Quite simply, we are not building enough new homes. In England, 109,370 homes were completed last year – less than half the number we need to be building to accommodate our growing population.
“Government measures such as Help to Buy so far appear to be having a limited impact on supply, and as we have warned previously this policy needs careful monitoring to make sure it is not in fact simply stoking up demand without helping to increase the number of new homes built.”
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