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First-time buyers make the most of slowing market as purchases hit 12-year high

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https://www.telegraph.co.uk/business/2019/02/19/first-time-buyers-make-slowing-market-purchases-hit-12-year/

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First-time buyers are now the driving force in the housing market, making more purchases last year than at any point since 2006 as a slowdown in prices opens a window to get onto the property ladder.

It is also the first time since 1995 that first-time buyers have been responsible for more transactions than existing homeowners moving house.

It comes as house prices have slowed down even as buyers benefit from rising wages and still-low interest rates.

As a result increasing numbers of aspiring owners have taken advantage of the pause in the market to take their first step onto the ladder.

 

Quote

 

The average buyer took on a mortgage with a deposit of just 15pc, the smallest proportion since 2008. Before the crisis struck borrowers routinely took mortgages with a 10pc deposit or less, a practice that has largely ended since the crash.

But smaller deposits are making a comeback.

Loans are also growing compared to incomes, with the median mortgage worth 3.64 times the borrower’s annual income - a record high, up from 3.27 times a decade ago.

Yet despite the size of the loans, monthly repayments have fallen dramatically.

The average first-time buyer’s combined capital and interest payment is less than one-fifth of their income, down from almost one-quarter in 2008.

 

 

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But but there was a fluff journo opinion piece in the news a month or two ago that said lower house prices would make it harder for first time buyers???

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10 minutes ago, Si1 said:

But but there was a fluff journo opinion piece in the news a month or two ago that said lower house prices would make it harder for first time buyers???

Great for renters as well, as the quality tenants buy and the average income in the sector drops.

Some might say the BTLrs are in trouble.

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Why would a 'slow down' in prices tempt FTBs into the market??? Wouldn't this make them think it might be better to wait and see if they fall and better value be had next year?  This does not stack up.

Besides there is no denying the reality that now is the worst time ever to buy a house. Only question is whether it will get even worse.

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9 minutes ago, Wayward said:

Why would a 'slow down' in prices tempt FTBs into the market??? Wouldn't this make them think it might be better to wait and see if they fall and better value be had next year?  This does not stack up.

Besides there is no denying the reality that now is the worst time ever to buy a house. Only question is whether it will get even worse.

 

We all thought that in 2009 - and how wrong the predictions were!

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21 minutes ago, Wayward said:

Why would a 'slow down' in prices tempt FTBs into the market??? Wouldn't this make them think it might be better to wait and see if they fall and better value be had next year?  This does not stack up.

Besides there is no denying the reality that now is the worst time ever to buy a house. Only question is whether it will get even worse.

I think it's what a lot of posters on this board have postulated:

  • FTB's seem desperate to get into the market and will jump on anything that they see as being reduced  or a "bargain" (when the actual truth is that they are still a long way from value for money)
  • BTL'ers were indeed driving up the prices of homes that would ordinarily have been within reach of FTB's. Now BTL'ers are exiting, FTB's are, to some extent, taking their place.

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3 hours ago, PeanutButter said:

The line that says first time buyers make up more transactions than existing homeowners moving house, is shocking. I would expect given there are so many more homeowners and the size of some chains that existing homeowners would be far higher proportion.

Hard to know what is causing this, all I can think of is an abnormally large amount of probate (unlikely to vary significantly over time so unlikely), landlords selling up, new build numbers increasing vastly or existing homeowners not moving. Probably all involved but is another indicator the market is in trouble.

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Do we now have an entire populace deep state programmed to think house prices only go up? It’s possible. We have an entire populace who think all sorts of crazy things they have no way of verifying or evidencing. It could be another law of the universe which people never think to question it?

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Just now, Killian said:

The line that says first time buyers make up more transactions than existing homeowners moving house, is shocking. I would expect given there are so many more homeowners and the size of some chains that existing homeowners would be far higher proportion.

Hard to know what is causing this, all I can think of is an abnormally large amount of probate (unlikely to vary significantly over time so unlikely), landlords selling up, new build numbers increasing vastly or existing homeowners not moving. Probably all involved but is another indicator the market is in trouble.

Have landlords been put off buying new properties by the tax changes? 

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FTBs started to leave the market in about 2002-3 so the real benchmark is when they return to that level, not 5 years later when most had already been priced out. Plus there's the little matter of a backlog of about 16 years' worth of FTBs who need rotating into homeownership as the interest only BTLers-who-should-never-have-been are rotated out of it.

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Family probate sale - advised by the estate agent to reduce the price of the house, as the volumes are so low nothing is selling at current overvalued prices of last year - but if you reduce they will sell he says. And they are selling at lower prices quickly

Edited by bear.getting.old

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10 minutes ago, Killian said:

The line that says first time buyers make up more transactions than existing homeowners moving house, is shocking. I would expect given there are so many more homeowners and the size of some chains that existing homeowners would be far higher proportion.

Hard to know what is causing this, all I can think of is an abnormally large amount of probate (unlikely to vary significantly over time so unlikely), landlords selling up, new build numbers increasing vastly or existing homeowners not moving. Probably all involved but is another indicator the market is in trouble.

Existing homeowners move far less often now than in previous decades. Lots of possible reasons including higher transaction costs (e.g. stamp duty), the price gap between their existing home and a nicer one being much bigger due to house price inflation, FTBing later in life close to peak earnings and financially maxing out on property #1 so no financial wiggle room for moving up to a better place, etc

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13 minutes ago, thewig said:

Do we now have an entire populace deep state programmed to think house prices only go up? It’s possible. We have an entire populace who think all sorts of crazy things they have no way of verifying or evidencing. It could be another law of the universe which people never think to question it?

The aspiring FTBs I talk to are incredibly despondent about the market. They talk as if it will never come down and is completely out of reach. I’d posit that if any of these gloomy FTBs were to find a place they like that’s come down enough to warrant an offer they would leap at it. 

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7 minutes ago, PeanutButter said:

The aspiring FTBs I talk to are incredibly despondent about the market. They talk as if it will never come down and is completely out of reach. I’d posit that if any of these gloomy FTBs were to find a place they like that’s come down enough to warrant an offer they would leap at it. 

Fine by me, if those aspiring FTBs want to throw their lifetime income away in desperation on some low quality newbuild that's fewer £ for my savings and future earnings to compete with in the market for homes that are actually nice.

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First time buyers have never seen a price crash if they are under 30. They just need access to cash and debt and will proceed. 

 

While it frustrates a lot on here I think we are swimming against the current 

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40 minutes ago, Killian said:

Hard to know what is causing this, all I can think of is an abnormally large amount of probate (unlikely to vary significantly over time so unlikely), landlords selling up, new build numbers increasing vastly or existing homeowners not moving. Probably all involved but is another indicator the market is in trouble.

New builds? There is no chain with these. I think we are building a lot more than in the past. Not read the article so just suggesting.

Edited by Captain Kirk

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2 hours ago, Wayward said:

Why would a 'slow down' in prices tempt FTBs into the market??? Wouldn't this make them think it might be better to wait and see if they fall and better value be had next year?  This does not stack up.

Besides there is no denying the reality that now is the worst time ever to buy a house. Only question is whether it will get even worse.

I agree is the worst time to buy, I am seeing reductions and still no takers. However, Once FTBs are in a position to buy , the current costs on a monthly basis are cheaper; thats the temptation.  This is without bringing the whole renting is dead money in to the equation.

 

FTBs are buying houses to live in at a cost they can currently afford, unfortunately they do not understand they are paying for somebody’s pumped investment, for which there are no longer any investors. 

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48 minutes ago, hurlerontheditch said:

First time buyers have never seen a price crash if they are under 30. They just need access to cash and debt and will proceed. 

 

While it frustrates a lot on here I think we are swimming against the current 

Plus an IQ below 90 to not realise that 40 years of banker slavedom isnt worth the pain of begging BOMAD and the sh1t marketing job that pays them just above average salary 😆...I'm thinking FTBers arent just under 30, but probably 30-50 and have been waiting a while. The relative % purchases increase as all transactions decrease...just more skewed stats BS.

First time buyers might desperate but they aint stupid.

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40 minutes ago, Now or never said:

I agree is the worst time to buy, I am seeing reductions and still no takers. However, Once FTBs are in a position to buy , the current costs on a monthly basis are cheaper; thats the temptation.  This is without bringing the whole renting is dead money in to the equation.

 

FTBs are buying houses to live in at a cost they can currently afford, unfortunately they do not understand they are paying for somebody’s pumped investment, for which there are no longer any investors. 

Catching a falling knife.  I am openly property bear and any time I bring up a possibility of falling prices I am met with blank looks.

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  • 294 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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