My analysis has shown that up to the end of the last
year, Loughborough first time buyers purchased 514 Loughborough properties. With wages rising at 2.8%; unemployment at a
low rate of 4.2% - down from 4.6% from a year earlier and the joint lowest since
1975 - national GDP rising at 1.87% and inflation at 2.3%;, tied in with
indifferent house price growth compared to a few years ago, this has given first
time buyers a chance to get a foot hold on the Loughborough property market.
Over the last year, the average purchase price of a Loughborough
first time buyer property has been £125,300 and the average deposit was £20,299.
Furthermore, my calculations show the average Loughborough parents contributed £8,881
of that £20,299 figure.
You see for countless Loughborough twenty something’s “The Bank of Mum and Dad (Loughborough Branch)” is perceived to be the only way they
will ever be able to afford their first home. In fact, Loughborough parents put
up a substantial £4.56m in the last 12 months to help their nearest and dearest
progeny onto the property ladder. This assistance towards the deposit makes a
huge difference enabling Loughborough youngsters, who thought they couldn’t get
on the housing ladder, more able to do so.
With mortgage rates at all-time lows, few Loughborough
twenty something’s would struggle to make mortgage repayments, but it is the
requirement of the deposit which is the issue. Although as parents (and
grandparents) are helping out where they can, it does little to address the
real problems of the housing market, whether for people renting or buying their
first home.
If you think about it, as a Country we have been fortunate
that the older generation who control the biggest share of the nation’s wealth
are so plentiful to those following after. We need to remember, though, that
this generosity is a sign
of the issues of the British housing shortage, not its solution.
But before I leave this article … note I used the word PERCEIVED
in a previous paragraph. Yes, the average first time buyer deposit is 16.1%,
but that is an average. Did you know that 95% mortgages returned to first time
buyers in late 2009 and have been available ever since? Also, lenders like
Barclays and many local Building Society’s now offer 100% mortgages (i.e. no
deposit) at 2.75% fixed for three years.
The perception is you need 15%, 20% even a 25% deposit to be
a first-time buyer – you don’t! You don’t need any deposit - but there is
always a but!
Over the last decade, many renters have upgraded themselves
into homes that they, or any generation before them, could never have afforded as a first time buyer in the past. You see the British housing market started
to change with the dawn of the new Millennium and I am seeing a slow but steady
attitude change when it comes to renting. Those tenants have found the price
difference of upgrading from the typical 1970’s TV show Rigsby “Rising Damp”
style rental property to plush terraced house or even semi-detached home, with
all the mod cons, comparatively inexpensive (when compared to the increase in
mortgage payments if they had to make the move as buyers).
Renting isn’t seen as the poor man’s choice, as many young
(and increasing older) people are becoming more at ease and comfortable with
the flexibility offered by private renting a property rather than jumping
‘lemming like’ into home ownership. Loughborough landlords will continue to see
growth in sector, and like Germany, today's renters will become homeowners in 20
years’ time – when they will inherit the wealth of their parent’s home.
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