Why now is the ‘worst time in 18 years’ to be a first-time buyer
Barratt Redrow’s boss says it’s the toughest time to be a first-time buyer since the financial crisis.
David Thomas, who has been chief executive of Britain’s largest construction company for more than a decade, said it was a ‘tough, very, very difficult’ time for young people trying to get on the property ladder.
Although he didn’t call it the “worst time ever” to be a first-time buyer, he said the situation was “definitely” approaching the bleak situation seen immediately after the financial crisis in 2008.
He added: ‘This was probably related to loans from 2008/2009 onwards, but when you look at areas like London and the south-east in particular, I think for first-time buyers it’s very, very comparable.’
He said the current ‘challenges around reciprocity’ were even harder for young people because there was no longer any State support, unlike in 2009.
Thomas said the average age of first-time shoppers was ‘increasingly increasing’. The average age in England is now 34, according to Skipton Group’s latest annual home affordability index, published in March. It was 29 in the 1990s.
The number of first-time shoppers fell last year as bosses blamed student loan repayments for the affordability crunch
Thomas told the BBC this was one factor contributing to “generational inequality”.
High student loan repayments mean it is harder for young people to get a mortgage because ‘they will have lower current earnings assessed by the bank for mortgage purposes’, he said.
This means that there is ‘inevitably a pool of people who can afford it’. [it] is reduced by the underlying debt position.’
Potential buyers also face a ‘truly dramatic change’ in expectations. interest rates “Since the beginning of the year,” Thomas said.
Hopes for a rate cut this year were dashed by the rise inflation It was triggered by a rise in oil prices following the outbreak of war in the Middle East in late February.
This means mortgage lenders have sharply increased the rates they offer on fixed-price deals.
‘If you’re a first-time buyer, it’s obviously a very different environment surrounded by a lot of uncertainty,’ Thomas said.
He added: ‘Unfortunately I think when you look back over the last five or six years it’s become more the norm, where there’s a certain message to start the year and you realize that message has changed over the course of the year.’
Data from real estate website Zoopla also revealed that there were 6 percent fewer houses available yesterday. first time buyers It was more than a year ago.
The average price they paid rose by 4.3 per cent year on year to £254,750 in April; This means they are borrowing more despite higher prices. mortgage rates accelerate monthly payments.
Zoopla said higher prices paid by first-time buyers had contributed to a rise in house prices, which rose from 1.4 per cent in March.
DIY INVESTMENT PLATFORMS
A.J. Bell
A.J. Bell
Easy investment and ready portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund trading and investment ideas
interactive investor
interactive investor
Fixed fee investment from £4.99 per month
free trade
free trade
Investing in Isa is now free on the basic plan
Trade 212
Trade 212
Free share sales and no account fees
Affiliate links: If you publish a product, This is Money may earn a commission. These deals are chosen by our editorial team because we think they’re worth highlighting. This does not affect our editorial independence.
