First time buyers 'facing enormous struggle'

05-Sep-2007

First time buyers are facing near-record levels of financial difficulty in buying their first home, the Royal Institution of Chartered Surveyors (Rics) has said, though the organisation has added that such problems could soon ease.

Currently, a first time buyer couple at the lower end of the income scale must save 96 per cent of their collective income in order to pay for a deposit and other housing costs, Rics suggests.

These same borrowers face an even bigger challenge in the south of the country, where the proportion rises to over 100 per cent.

"First time buyers are facing an enormous struggle to access the housing market. This may worsen if the turmoil in the US market forces mortgage providers to tighten lending criteria and demand even higher deposits," advised David Stubbs, senior economist at Rics.

"However, affordability pressures may be nearing a peak.

"With house price growth expected to be below earnings growth in 2008, and with possible interest rate cuts in the second half of that year, the burden on first time buyers may lesson somewhat," he added.

"First time buyers in the UK are still desperate to own their own homes and the fact they haven't been put off in the face of overwhelming odds is testament to that spirit. However, as the latest information from Rics suggests it is becoming ever more difficult for many first time buyers to make the leap from tenant to home owner," commented Helen Adams, managing director of first time buyer advice website FirstRungNow.com.

The government needs to reflect on the current situation and has to offer the life blood of the housing market greater opportunity and flexibility in realising their home owning dreams.

"We have witnessed FTB’s getting more and more creative in trying to buy their first home from utilizing shared appreciation mortgages, getting a guarantor, to buying with a friend – and with the announcements of the latest figures is appears that it is one door slamming after another.

We would like to see the Government to commit to really helping first time buyers out by exempting them from stamp duty and stemming the rise in buy to let of one and two bedroomed properties - typically the domain of those wanting to step on the first rung of the property ladder," Ms Adams added.

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