At first glance the housing market appears to be thriving: for sale signs are being replaced by sold signs more quickly than ever, estate agents are reporting a surge in the numbers of would-be buyers signing up and the prices properties are being listed at are continuing to climb.
Things may slow down as parts of the country go into lockdown and housing markets are effectively shut but record low interest rates combined with a stamp duty holiday are putting more money into the system.
However, for first-time buyers the picture is grim because rising prices and stagnant wages have made raising a mortgage a problem in some parts of the country.
“Restrictions on lending mortgages to first-time buyers mean thousands of households will face yet more years of renting while they save up the deposit they need,” says Dan Wilson Craw, the deputy director of the campaign group Generation Rent.
“Many more people have lost work during the pandemic and are running down their savings in order to pay their rent. For all its claims to want a resurgence of homeownership, the government’s stamp duty holiday is stoking house prices and means that once renters’ finances have recovered, they will have soared out of reach again.”
The difficulties would-be buyers face are highlighted by analysis showing that three in 10 young households across Great Britain do not earn enough to pass lenders’ affordability checks for even an 85% mortgage. And on top of that, a deal of this type means saving up a 15% deposit, which many would-be buyers would find difficult or impossible.
The average price paid by first-time buyers hit £196,390 in July but there were huge variations across the country. In inner London the average price paid was £517,920, while in the north-east of England it was £110,280.
The research, done by Hamptons International for Guardian Money, looked at household earnings and average prices across Great Britain, and assessed how many would qualify for a home loan on a lender’s typical limit of 4.5 times a salary.
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