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2007 increases in house prices will hit first time buyers the hardest |
In 2006, the growth of property prices in the UK stripped even the expectations of most property experts. A recent article in the Guardian newspaper, for example, highlighted that while many industry commentators predicted a 2 to 4 per cent rise in house prices in 2006, actual prices of property rose by almost 8 per cent. This year, prices are expected to rise at a slower rate - 3 to 6 per cent; but, as last year's estimations show, a variety of factors could work to thwart this expectation.
Forecasts for the property market in 2007 attribute a variety of factors to its current buoyancy: these include the rise in single households, a deficiency of new housing stock and a rapidly ageing population. These particular issues have led to the current volatility of property prices, and they indicate a pattern that looks unlikely to fade in the next 12 months.
David Miles, chief UK economist at Morgan Stanley, has estimated that over the last ten years, house prices in Britain have risen by 112 per cent; conversely, real disposable income has increased by only 29 per cent. While this rise has been most prominent in the south-east of England, other parts of the UK have also been experiencing rises in property prices: according to Liam Bailey, head of residential research at Knight Frank, Northern Ireland and Scotland will see their house prices grow by 10 per cent and 9 per cent respectively in 2007.
One of the most significant consequences of this dramatic rise in house prices in the last decade is that it has made it much harder for first time buyers to enter the market. In fact, it has been estimated that only 36 per cent of mortgage approvals are currently for first time buyers, as opposed to 58 per cent in the early 1990s.
New research from Halifax suggests that first time buyers were actually paying over 150, 000 for property in 2006, as opposed to just over 137, 000 in 2005 - an 11 per cent increase in just a year. The study also found that in the last five years, house prices for first time buyers has risen by 95 per cent, from around 77, 000 in 2001. Worst affected are people looking to enter the property market in London, with the average first time buyer paying over 250, 000. Lancashire, on the other hand, offers first-time buyers the cheapest property.
As the needs of first-time buyers have become increasingly more important in this particular property climate, many mortgage providers have been offering specialist first-time buyer mortgages in order to allow this important demographic to gain a firm foothold on the property ladder. Indeed, a variety of different mortgage types have emerged, including capital raising mortgages, home-mover mortgages and debt consolidation mortgages, among a variety of others. So property buyers can always rest assured that they'll be able to find appropriate mortgages for their needs, however much property prices may rise in 2007. About AuthorMartin McAllister is an online freelance journalist. He lives in Scotland.
Source: ArticleTrader.com
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