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I noticed this article in the Belfast Telegraph on Saturday:

First time buyers face the squeeze

01 October 2005

FIRST-TIME buyers are being squeezed out of the housing market, industry watchers have warned, after a survey found that property prices in Northern Ireland continue to soar.

The alert follows a national survey that revealed that house prices in the province are growing at four times the rate of property in other parts of the UK. The Nationwide Quarterly Review revealed local property prices are experiencing growth of 11.4% - four times as much as the UK average. The average house price here is £131,801, according to the report published by the Nationwide Building Society.

Historically, Northern Ireland has had a higher proportion of first-time buyers than the rest of the UK, the Council of Mortgage Lenders said. But the number of first-time buyers has dropped from 18,000 in 2001 to 11,000 in 2004, a spokesman said. "The number of first-time buyers is likely to continue to decline," he said.

"There are issues with affordability and everything points to that at the minute. We are keen to see co-ownership schemes supported and expanded to help more people onto the property ladder."

Professor Stanley McGreal of the University of Ulster's School of the Built Environment said it was vital for a healthy market that first-time buyers should have access. "First-time buyers are getting squeezed," he said.

to which someone has replied to with this letter (standard stuff, but at least the message is getting across):

Would-be house buyers should tread carefully

Would-be house buyers should tread carefully

06 October 2005

As a possible first-time buyer I noted with interest the Belfast Telegraph article headed First-time Buyers Facing Squeeze).

However, as with most property articles based on figures derived from mortgage lenders, estate agents and the like, the full picture was not made clear. Although the average property price in Northern Ireland may be £131,801 according to figures published by Nationwide, these same figures show prices are 35% above their long-term average. Growth of 11.4% just exacerbates this and any economist will tell you that it is impossible for house price inflation to out-strip wage inflation indefinitely. Also, markets generally have a tendency to revert to this average.

Professor Stanley McGreal states that it is "vital for a healthy market that first-time buyers should have access." It is obvious that the market isn't healthy when numbers have declined by 40% in a three-year period. Options such as co-ownership, 100% mortgages and increased mortgage lending multiples - touted as solutions - are, in fact, not the answer. They just provide false market props, allowing people to buy when conditions dictate they should not. Borrowing greater sums of money relative to income appear to be "cheaper" now due to low interest rates. In reality, the burden of payment of the loan is spread over a greater period. This debt is not eroded by inflation as it was with the previous generation.

Annoyingly, what is rarely mentioned is the current case for renting. The old adage of "renting is dead money" just does not ring true any more. In many areas it is considerably cheaper to rent than pay an interest-only mortgage on an identical property (the equivalent of renting from a bank or building society.) Renting is even greater value when the cost of maintenance, rates and wear and tear are factored in. Would-be buyers should consider putting their plans on hold and have their rent effectively subsidised by the current raft amateur speculators. Money saved can be put towards a deposit at a time when market prices are more closely linked to reality.

It is also worth bearing in mind that other parts of the UK, which have experienced a similar boom, are now witnessing price falls.

Edited by The_Equalizer

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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