First time buyers face further affordability constraints

04-Jul-2007

House price growth continued to exhibit relatively muted levels of growth in June, but first time buyers looking for an opportunity to make their move are likely to be hampered by increased financial constraints, it has been advised.

The Halifax House Price Index found that prices rose by just 0.4 per cent in the month to June, pushing annual growth up by 0.1 per cent to 10.7 per cent.

But further slumps in price growth are likely to be fuelled by a reduction in demand caused by increased mortgage rates, the bank advised.

"The increase in mortgage interest rates - both for fixed and variable products - is curbing demand and will continue to act as a constraint over the coming months," commented Halifax chief economist Martin Ellis.

"These rising affordability pressures will make it ever more difficult for first-time buyers to get into the housing market and for existing house owners to trade up," noted Howard Archer, an economist at Global Insight.

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