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U.k. First Time House Buyers Dwindle

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from Bloomberg:

U.K. First-Time House Buyers Dwindle, Threatening Blair's Boom

2006-08-17 19:07 (New York)

By Laura Humble

Aug. 18 (Bloomberg) -- Lorraine Highton is searching online

for someone to live with. She isn't looking for love; she's

seeking a stranger to help buy her first apartment in London.

Highton, 32, has signed up with a Web site that matches

first-time homebuyers with potential partners. After the average

price of entry-level properties tripled to a record 222,005

pounds ($421,000) over the past 10 years, many young adults are

struggling to raise the money for a down payment.

``I know a lot of over-30-year-olds in London who can't get

on the property ladder,'' Highton says. ``You need to be earning

at least 55,000 pounds to buy on your own in London and going

into it alone is nerve-wracking.''

The number of first-time homebuyers dropped to a 25-year low

of 320,000 last year, according to estimates by Edinburgh-based

HBOS Plc, Britain's biggest lender. As new purchasers get older

and rarer, the U.K.'s economic growth may slow, says Tom Vosa, a

former Bank of England economist who is now head of market

economics at National Australia Bank in London.

The British appetite for home ownership has helped fuel 36

straight quarters of economic expansion under Prime Minister Tony

Blair, who came to office in May 1997 as soaring property values

spurred consumers to borrow and spend. Seventy percent of U.K.

homes are owner-occupied compared with 56 percent in France and

41 percent in Germany, according to the Royal Institute of

Chartered Surveyors, based in London.

``Rising house prices aren't necessarily a good thing,''

Vosa says. ``The risk is at some stage, the value of the housing

stock falls precipitously because there are simply no buyers

left.''

Rate Rise

The U.K. central bank's Aug. 3 decision to raise interest

rates by a quarter-point to 4.75 percent made British mortgages

more expensive. Investors are betting on another rate increase by

the end of the year, with the yield on the interest-rate futures

contract maturing in December at 5.17 percent late yesterday.

Many homeowners are already stretching themselves, with the

average loan for a first property at 110,000 pounds in June, a

record 3.21 times the borrower's average earnings, according to

the London-based Council of Mortgage Lenders.

Last year economic growth slowed to a 13-year low of 1.9

percent. Bank of England governor Mervyn King says the dearth of

first-time buyers may crimp the $6.8 trillion housing market.

``Clearly, in the long run, the market requires first time

buyers to come in and provide base demand,'' King said at an Aug.

9 press conference in London. ``There is a great deal of

uncertainty about the sustainability of the present level of

house prices relative to earnings or incomes.''

More than 60,000 aspiring owners under the age of 40 were

unable to buy homes last year, according to calculations by Steve

Wilcox of the Center for Housing Policy at York University in

northern England.

Housing Help

The slowing of the first-time market led Blair's government

in April to introduce a shared-ownership program that will

provide 970 million pounds in loans and grants to help ``key

workers'' such as nurses become homeowners by 2010.

The difficulty Richard Cohn had buying his first home in

Finchley, north London, five years ago inspired him to start

sharedspaces.co.uk, the site Highton is using to find a partner

to share the cost of purchasing a home.

``I got a modern shoebox for 140,000 pounds and if I was

going out there looking now, I wouldn't be able to afford my

original place,'' says Cohn, 36, adding that his experience as a

computer consultant and real estate agent helped him start the

business. His ``co-buyer network'' has registered more than 2,500

members since going online in February.

Debt Drag

The growing burden of student debt is also making it harder

for university graduates to get onto the property ladder, says

Bob Pannell, research director at the CML.

``While home-ownership remains a long-term aspiration for

the majority, the reality is that for many young people the

combination of house prices and student debt is reinforcing a

lifestyle choice in favor of renting,'' Pannell says.

The average student expects to graduate with a record 11,900

pounds of debt this year, according to research by London-based

polling company GfK NOP for Barclays Bank and the National

Council for Graduate Entrepreneurship.

The average first-time buyer put down a deposit of 23,967

pounds last year, HBOS estimates. The average university graduate

earned 21,415 pounds, according to Incomes Data Services in

London.

Demand for rented accommodation from young people unable to

afford homes has created a growing market for those with the

money to invest in rental property. Lenders issued 701,900 ``buy-

to-let'' mortgages in 2005, compared with 417,500 two years

earlier, according to the CML.

That means Highton faces even more competition in the hunt

for her perfect home.

``I just feel like I am burning my money on rent,'' she

says. ``I really hope I find someone on the Web site to buy

with.''

--With reporting by Jennifer Joan Lee in London. Editors:

Atkinson (dde/wsm)

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`I just feel like I am burning my money on rent,'' she

says.'

Why do people have such ridiculous notions like this about paying rent? You get somewhere to live in return for rent, one of the few essentials worth shelling out for in this world surely?? :huh:

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i think its the fact that many of us feel as if wer being taken for a ride or sneered at by the landlord as thats how most of the greedy fat cat landlords apear on tv and have stuck in our minds that thats what all landlords are like, moeny grabbing bastards and squeeze every penny out of us to fuel that money consumption appetite

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`I just feel like I am burning my money on rent,'' she

says.'

Why do people have such ridiculous notions like this about paying rent? You get somewhere to live in return for rent, one of the few essentials worth shelling out for in this world surely?? :huh:

Could it be something to do with the fact that anyone who bought in a house 10 years ago has made a massive return on their investment (maybe 2000%) whilst the renter has nothing, and can't afford to buy a bedsit now?

Just a guess.

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`I just feel like I am burning my money on rent,'' she

says.'

Why do people have such ridiculous notions like this about paying rent? You get somewhere to live in return for rent, one of the few essentials worth shelling out for in this world surely?? :huh:

Funny, you never hear these morons say "I just feel like I'm burning money going to restaurants, wine bars, exotic holidays, buying the latest techno craze or yet more clothes"?

Anyway, what's interest? Isn't that dead money.

The bubbles bursting (we're in about 1988) next year and those suckers who bought into the market's 'winner's curse' (04-06) will regret it. That's a fair bit of dosh burnt, if you ask me!

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Guest pioneer31

Funny, you never hear these morons say "I just feel like I'm burning money going to restaurants, wine bars, exotic holidays, buying the latest techno craze or yet more clothes"?

Yeh, absolutely.

You never hear someone crying 'I just feel like I'm burning money on that 25k 4x4 which does 9 miles to the gallon, depreciates like a stone and has the extraordinary quality of getting me from A to B, just like any other f***ing vehicle

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Yeh, absolutely.

You never hear someone crying 'I just feel like I'm burning money on that 25k 4x4 which does 9 miles to the gallon, depreciates like a stone and has the extraordinary quality of getting me from A to B, just like any other f***ing vehicle

Your dead right, couldn't agree more.

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Yeh, absolutely.

You never hear someone crying 'I just feel like I'm burning money on that 25k 4x4 which does 9 miles to the gallon, depreciates like a stone and has the extraordinary quality of getting me from A to B, just like any other f***ing vehicle

these people find the cost of running that vehicle as peanuts.. it's all relative.

just like you would find it expensive running a 1.6l compared to your 950cc fiat panda, they would find running a 12 litre expensive compared to running their 5 litre.

Edited by Impartial

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Anyway, what's interest? Isn't that dead money.

You lot don't seem to understantd the whole interest thing.

If you deposit money in the bank, the government steals 7% of it via inflation each year. The interest (5% less tax = 4%) is something to make you feel better about your loss,

If you buy a house with the money, the government doesn't steal 7% of your house each year.

If you bought the house on a mortgage the interest you pay is more than offset by the reduction in the value of what you owe.

Comprendez?

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Guest pioneer31

these people find the cost of running that vehicle as peanuts.. it's all relative.

just like you would find it expensive running a 1.6l compared to your 950cc fiat panda, they would find running a 12 litre expensive compared to running their 5 litre.

My point was that running large cars is an awful waste of money, but most people don't think so, because it bolsters their ego to flash round in the latest model. A car only performs one function, so why spend a 3 times more to do it?

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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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