26/06/2008

First-time buyers priced out says new report

A new study of the national profile of housing affordability, compiled for Hometrack, finds that over a quarter (28.3%) of young working households in Britain are unable to access even the lowest rungs of the property ladder in their local markets. The largest proportions are in London (41%) and the South West (40%).

Rising mortgage rates before and after the credit crunch, along with strong house price growth, have further increased affordability pressures on first-time buyers. The study shows that the average mortgage costs for a first-time buyer have risen by 12% over 2007, with the mortgage cost to earnings ratio for a first-time buyer now exceeding the previous peak in 1990 (34.5% of earnings in 2007, compared with 3.1% in 1990).

The report also examines the cost of renting versus buying. It reveals that, across nearly the whole country, the cost of renting a home is substantially lower than the cost of buying one. Nationally, the cost of renting is just 68% of the cost of buying a typical two/three-bedroomed home.

A summary of the report can be downloaded from www.hometrack.com.

Back