It could be the most important question for our generation; how will your children ever be able to afford to buy their own home? House prices have rocketed, deposits have soared and interest rates are expected to rise next year. On the surface the housing market is still moving inexorably upward and is worth being a part of, but will newcomers still be able to get on the housing ladder, and how did we end up like this?
What is available? Mortgage broker St Neots
The UK charity Shelter recently declared that 34 areas of the country have no affordable 2-bedroom homes for families earning the average wage. When you start to take a look at what’s available then you start to see the reality of this. A quick browse through the available houses in an estate agent window in Watford reveals 30 properties, just 3 of which are less than £250,000, all one bedroom flats, one of which is available only to those of retirement age. Of the two remaining, one has already been sold, leaving one property at £130,000 before all make the jump to £250-300,000.
Upon asking the estate agent inside if there are any £200,000 two-bedroom homes appropriate for a first time buyer, a smile of sympathy accompanies his response; “You might be able to get a one-bedroom if you’re lucky, but if you want two bedrooms you need to up your budget. Prices are going through the roof.”
Compared with 30 years ago, first time buyers are putting down a 25% deposit instead of 5%, take out a 30-year mortgage instead of a 25-year one, and borrowing 3.4 times their yearly wage compared with just double their salary. Don’t forget either, that’s on average. In places within commuter range of London like Watford and any of the 34 areas marked by Shelter as unaffordable, financial demands on new homeowners are likely even greater.
How will things change in the future? Mortgage Broker St Neots
Things look grim for the first time buyer right now, how will things change for them in the future? And how will things change in the housing market overall if the newcomers are priced out of the market? Well it is not all doom and gloom, far from it. Read more in Part 2.
Read more in Part 2. Thanks for reading our latest blog.
Your home may be repossessed if you do not keep up repayments on your mortgage.