What is the Property Landscape Like for First Time Buyers?

It has become a well known fact that property prices have been on the rise for a number of decades now. Despite a global recession in 2008 which saw house prices crash, property continues to shoot up in value every year, with the average price now standing at £234,794. This figure strikes fear into the hearts of many first time buyers, who now need to acquire a relatively large sum of money for a mortgage deposit. Here is some relevant information on the current property landscape. 

Affordability

One of the key policies in the Labour Party’s manifesto in the most recent general election was to address to housing crisis which currently exists in the UK. Prices have largely been on the rise because demand outweighs supply, although it should be noted that wages have also been stagnating since the financial crash.

These two factors have led many to view the property market as unaffordable, especially compared with pre-2000 prices. First time buyers can now expect to pay 7.6 times average annual earnings, compared to just 3.6 in 1997.

 

Will Prices Fall?

Many people have been left wondering whether they will ever be able to afford a house. So long as demand outweighs supply, it is likely that prices will continue to rise, but higher prices are likely to reduce demand because purchasing property will cease to be a viable option for many.

Interestingly, house prices have now been falling for 3 months in a row, which could be indicative of people losing interest in the housing market as home ownership becomes increasingly expensive. Short term dips are common, though, so speculation over the reasons should be taken with a pinch of salt.

The UK Election

Many would argue that it is up to the government to come up with solutions to the housing crisis. Since the Conservative’s came to power in 2010, however, ownership has fallen by 200,000. This could be one of the reasons for Labour’s success in the most recent general election.

They promised to address the problem by building more new homes and introducing a FirstBuy scheme, which would help first time buyers purchase property. Although Labour failed to win the election, ideas such as this are seen to be widely popular and could influence the market in the future.

New Homes

That being said, new homes are being built every year, and the government has introduced a Help to Buy scheme which offers loans to first time buyers. Although house construction quotas have been falling behind each year, there seems to be a consensus that property construction should be high on the list of priorities for any government.

It would lessen demand for properties and give greater access to the property market for those who previously could not afford it.  

Brexit

One final factor to consider in relation to the property market is the impact which Brexit will have/is having on the economy. In essence, Britain’s looming exit from the EU has caused much market instability and uncertainty, with the economic consequences not yet clear.

People may well be encouraged to sell their homes quickly through companies like The Property Buying Company if the economic landscape takes a sudden downturn. On the flipside, construction investors may well be discouraged from spending money because of economic uncertainty, which could stunt the building of new homes. 

These are some of the current factors which the first-time buyers of today must consider. There is no doubt that buying property is much more expensive than it used to be, but with new government schemes, acknowledgement of the housing crisis, and the current dip in property prices, there could well be more opportunities to buy an affordable home in the near future.