It’s a good thing that the Chancellor made a few announcements on housing policies in the Budget this week. As we have to admit housing prices (especially in London) have gone through the roof and it’s proving impossible for first-time buyers to get on to the property ladder. Jermaine Haughton talks us through some of the numbers.
It’s still doom and gloom for first-time buyers. They face an even greater challenge to get on the property ladder according to new research showing a new record for March.
According to property website Rightmove, the average asking price across England and Wales increased by 1.6% month-on-month to £255,962 – £2,304 more than the peak recorded in July last year. Sellers’ asking prices have been boosted by 6.8%, or £16,251, compared to the corresponding month a year ago.
London housing prices continue to boom
London is experiencing an annual growth of a barely believable 11.3%. The North was the only region where asking prices fell annually, by 0.3% to £145,861 on average.
Property experts say confidence has returned to the market partly due to the improving economy and low interest rates, predicted to stay at 0.5 per cent during 2014, making borrowing more appealing to buyers.
Critics add that the latest ‘property bubble’ is a result of poor government policy, which has seen a lack of house building combined with the introduction of the Help to Buy scheme.
While the initiative, providing taxpayer-backed loans for would-be buyers, has opened the housing market to thousands of budding homeowners and first-time buyers struggling to generate a deposit, it has also driven up demand for an already relatively small pool of houses.
First time buyers getting hit by bigger deposits
At the same time, LSL Property Services has reported its own customers registered as first-time buyers are paying bigger deposits, averaging £27,519. However, with real wages stagnating, deposits are making up more than 75% of a buyers’ income, a significantly larger proportion than in the past.
In the capital, the pressures of the property bubble has reportedly led to a new phenomenon called ‘ghost gazumping,’ whereby homeowners suddenly increase the asking price of their house days before they are due to exchange contracts.
Luckily the Chancellor addressed some of these issues in this week’s budget speech,admitting that the UK does have a housing crisis. Many will be thankful that the Help to Buy equity scheme for new-build homes has been extended to 2020, but is it enough?
Jermaine Haughton is a journalist and digital media professional.