Door Is Shut To First Time Homebuyers ......

[LuckyOne]

It amazes me that the depths to which developers will sink to protect the value of their inventory and land banks are so deep.

It is a crying shame that first time buyers have to save 50% of their incomes for 5 years, or, more likely, 20% of their incomes for 12.5 years just for the "privilege" of taking on a lifetime of debt with a significant portion of that time spent in negative equity.

Their logic seems to be that first time buyers should have access to credit to buy overpriced inventory from homebuilders and commit themselves to (probably) a lifetime of debt servicing sooner rather than later. They are unwilling to admit that prices may fall materially in the next 2 to 5 years which will dramatically improve the quality of life of first time buyers

If they are as concerned about the plight of first time buyers as they sound, perhaps they could consider knocking 40% off the price.

http://uk.reuters.com/article/idUKTRE69Q5Z820101027

Edited for completeness

First-time buyers have to save almost half their monthly wage for five years if they want to get a foot on the housing ladder, a report published by the Home Builders Federation showed on Thursday.

According to its "Broken Ladder" report, first-time buyers in their 20s would have to save 45 percent of their monthly net income over five years to afford the 37,000 pound deposit needed to buy an average starter home.

In London and the South East, the figure climbs to almost 60 percent of net income.

A lack of affordable homes and limited access to mortgage financing are shutting young people out of the property market, where the average deposit for a house is 230 percent of average salary, the report says.

Property prices rose for the first time in four months in October while mortgage approvals dropped to their lowest levels in seven months in September, as banks remained reluctant to lend due to higher-than-expected funding costs.

All housebuilders, including Persimmon, Barratt Developments, Taylor Wimpey and Bellway, are exposed to the drought in the first-time buyer market.

Housebuilders have offered incentives, such as shared equity schemes, since the recession to help first-time buyers, but the scrapping of the government's HomeBuy Direct scheme at the end of September dealt a further blow to the market.

The high cost of private rents and utility bills is further crimping young people's ability to save for a house.

According to the report, those aged 22-29 saving for a deposit would have only 13 percent of their monthly wage left to cover bills and living costs.

"These figures reveal the extent of our housing crisis, first-time buyers -- the life-blood of the housing market -- are almost entirely shut out," Stewart Baseley, Executive Chairman of the Home Builders Federation, said.

"The lack of mortgage availability is further strangling a market choking on a lack of supply. We desperately need an increase in lending and a properly functioning and sustainable mortgage market."

Edited October 28, 2010 by LuckyOne

[Pauly_Boy]

A generation that has been truely pillaged of all hope!

[Kyoto]

Well, it was always going to happen.

A decade of high prices, but people could pay using cheap and easy credit.

Unwind the credit, not to excessive levels - just back to prior the boom, and alas people can't afford them.

Prices simply need to fall back to where people can afford. It ain't rocket science.

[montesquieu]

Well, it was always going to happen.

A decade of high prices, but people could pay using cheap and easy credit.

Unwind the credit, not to excessive levels - just back to prior the boom, and alas people can't afford them.

Prices simply need to fall back to where people can afford. It ain't rocket science.

Kind of shooting themselves in the foot with this announcement. After all, salaries are unlikely to rise any time soon, there are no Government handouts any more, and the banks aren't going to lend to fill the gap.

That only leaves the obvious thing that can flex .... prices need to come down and the main function of that is for the developers to take a hit on the inflated book value of their land banks built up in the boom (which is the largest component of price, FTB shoe boxes costing next to nothing to build, £20k tops)..

Bit of a stupid press release from their perspective IMO.

[JustAnotherProle]

They all want you to just ignore the elephant in the room...

HOUSING IN THE UK IS OVERPRICED!

[bomberbrown]

It's always down to the long term trend of the incomes/price ratio. At the moment, either house prices have to come down significantly or wages increase significantly. Take your pick.

Simples.

[singlemalt]

I was recently speaking with a colleague who worked in the building industry for a few years and whose entire family is in the industry (some at senior levels). He described the way they all work and collaborate as a Cartel. It's comprised of many rich and powerful people who continually lobby politicians so there's little wonder that this is ultimately the modus operandi.

[Sledgehead]

Property prices rose for the first time in four months in October

Halifax : -3.6%

Nationwide : -0.7%

RICS : negative balance

.... but don't let us allow the facts to get in the way of a good story!

[Bloo Loo]

It's always down to the long term trend of the incomes/price ratio. At the moment, either house prices have to come down significantly or wages increase significantly. Take your pick.

Simples.

nonsense...its a shortage of housing thats the cause...demand is there...people just have to give in to Sibleyesq emotions and buy now, while they are still hot.

[pyewackitt]

nonsense...its a shortage of housing thats the cause...demand is there...people just have to give in to Sibleyesq emotions and buy now, while they are still hot.

'...and that's cutting my own throat!'

Quote: Mr. 'House prices only ever go up' Dibbler

Dibbler & Dibbler Estate Agents

Ankh Morpork

Information on our latest properties:

1. 'It's a bijou riverside apartment on the Ankh with indoor heating and a bucket for no.2's'

2. 'Absolute latest in modernity with a Troll powered underfloor heating system'

3 'Close to the palace this hovel has 3 sub-basement floors for successful Dwarves'

4. 'Suburban Vampires might go batty for this belfry with renovation opportunities'

5. 'Top floor apartment near the old Opera house going for a song'