First Time Buyer Levels Surge In 2014


London property market

First time buyers have returned to the property market in abundance according to figures releases by the Council Of Mortgage Lenders (CML). According to new figure the number of first time buyers are taking out the larger proportion of new home loans than at any time since the start of the century. The figures also showed that buyers were having to put down a 20% deposit and need to take on the biggest multiples of mortgages than at any time since 2007 just to get on the housing ladder. Buyers are having to take out larger loans because house prices are increasing faster than at any time since 2007 and many commentators are concerned that we are seeing prices increasing too quickly which could cause problems if they continue.

Despite the increase in the number of sales going through the number of transactions is still well below the peak of 2007. there are concerns that borrowers are taking on too much debt to get on the housing ladder. Typically borrowers took out loans worth £114,000 or 3.33 of their salary. This figure is an increase on 2012 which saw an average of 3.26  times annual salary. The figures show that apart from 2007 the levels of borrowing and multiples of income are now at their highest levels since records began in 1974. In 2007 the figures were 3.36 times salary. This in itself should start to ring alarm bells but the government will not be doing anything too drastic particularly with a general election just around the corner.

House prices in London are continuing to show strong growth even though the Chancellor has slapped a tax on non-resident foreign investors. The introduction of the new tax which will mean that foreign buyers will be subject to the same tax laws as UK residents has done nothing too dampen down the market which is steaming ahead. There is some speculation that the government may reduce the limit on the purchase price on the Help To Buy Scheme which is currently set at £600K. Some commentators believe that reducing the limit to £300k – £400k may have an impact on prices particularly across the south east. We shall have to wait and see.

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