“Housing Crisis”! “Deposits hit £80,000”! “First Time Buyers priced out of the market”!, scream the latest headlines. It’s little wonder that so many people trying to make the leap onto the property ladder are disillusioned when they are bombarded with the media outcry.
However, delve a little deeper and you’ll see it’s not so black and white, there are two sides to every story;
Is there really a housing crisis?
The answer to this is undoubtedly yes. There is a shocking lack of homes in Britain to meet demand. There is an even greater shortage of affordable new homes for aspiring purchasers.
Much of the shortage has been blamed on the Buy-to-Let market, with properties being snapped up by landlords with the intention of renting them to the private sector. However, we cannot ignore that the low level supply of housing has also been contributing to three decades of low level construction.
The situation has become a daily news topic, so much so that David Cameron announced a “radical new policy” in January 2016, a policy in which his government would take action to combat the shortage of new homes.
This plan of action includes, building on Brownfield sites and creating a “starter home fund” which will be designed to allow at least 30,000 new starter homes, and 30,000 so-called market homes, to be developed on 500 Brownfield sites across Britain.
When I see the figures surrounding house deposits I often double-take! £80,000.00? How on earth does anyone manage to save that amount of money? I know that if I were a first time buyer looking at these kinds of figures any hope I had of owning a home would be lost!
However, with average house prices in England and Wales currently at £288,000.00 a usual 10% deposit would mean saving £28,800.00 which although is still a lot of money, is not nearly as eye-wateringly unachievable as some would have you believe.
The Government has also recognised the difficulty that First Time Buyers face in getting on to the property ladder and has offered solutions such as the Help to Buy ISA, an initiative which could boost your savings by 25%.
No Room at the Inn
The latest research conducted by Santander shows that by 2030 one in four London homes will cost at least £1m and the average house price across the rest of the UK doubling. As it is unlikely that wages will rise at the same rate, there is a fear that first time buyers will be locked out of the market.
There are however, several initiatives out there for first time buyers needing a little help.
The Help to Buy scheme allows a purchase to take place with only a 5% deposit. The reduction in Stamp Duty rates in December 2014 and the Help to Buy ISA scheme are all incentives for taking the leap into property ownership.
Amongst all the headlines, there are actually some very positive statistics. The Council of Mortgage Lenders has recently reported several months of year on year growth lending to first time buyers with the strong finish of the housing market in 2015 set to continue this year.
A perfect storm is brewing in the housing market and now is the time to take action.