Saturday, December 11, 2010

Poor stuck with renting

First-time compete to buy property

There is a significant gap opening up amongst Britain's aspiring first-time buyers in terms of the amount of money saved for a deposit. While a third of first time buyers have less than a 10% deposit saved, almost half have saved at least a 40% deposit. This has been identified as a "deposit gap," as a wealthier working population in their twenties benefit from higher salaries and savings and loans from richer parents, while those from poorer backgrounds struggle to save. Contradicting reports of a fragile housing market, the survey found demand for property is high. 25% of respondents said they would have liked to buy a house, but did not have the required deposit. Mortgage availability was also an issue: 71% of respondents said it was more difficult to obtain a mortgage than a year ago.

Posted by drewster @ 12:15 PM (1435 views)
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8 thoughts on “Poor stuck with renting

  • A meaningless article. High demand for houses contradicts fragile market? Nearly everyone wants to buy; it’s the money that’s lacking. We are only told what we already know – wealth is becoming more polarised.

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  • “On one hand are the relatively comfortable urbanites, university graduates and middle-class offspring.”

    You have to wonder here, the previous generation of comfortable university graduates, what is to be on the next generation of university graduates? The ones the ConDems have now condemned to start their career with a millstone of debt hanging around their necks. Hard to imagine these people polling into the bank and asking for a 6x mortgage to go alongside their £40-50k of student debt. I guess the average age of a first time buying will simply increase if the property price madness continues, 35 to 45 maybe.

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  • I don’t buy this. (pun intended).

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  • Mr Flibble,

    I expect banks will still lend to students, even if they have debts. Both the existing and proposed student loan systems only require limited repayment as incomes rise. This means students can still afford to save a deposit, though it will take a bit longer.

    The following table (courtesy of Money Saving Expert’s student loan repayment table) shows earnings and annual loan repayments.

    Earnings Annual Repayments (pre-2011 system)
    £15,000 Nothing
    £16,000 £90
    £21,000 £540
    £22,000 £630
    £30,000 £1,350
    £40,000 £2,250
    £50,000 £3,150

    For a bank manager debating whether to grant a mortgage to a graduate earning £21,000, the difference is £45 a month, which covers a mortgage of £6,750 over 20 years at 5%. For a graduate earning £30,000, the difference is £112.50 a month which covers a mortgage of £17,000. If you double those figures for couples, then it could make a bit of a dent in house prices.

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  • “While a third of first time buyers have less than a 10% deposit saved, almost half have saved at least a 40% deposit.”

    40% deposits? Why didn’t these people buy a few years ago when credit was still easy?

    “Contradicting reports of a fragile housing market, the survey found demand for property is high” says the property website, Findaproperty.com.

    This story smells a bit whiffy to me

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  • mark wadsworth says:

    Epic Fail:

    “…demand for property is high. 25% of respondents said they would have liked to buy a house, but did not have the required deposit.”

    Demand = desire x ability to pay.

    To put it brutally, there is little demand for food and fresh water in the poorest parts of Africa. There are needs, wants, desire for food and fresh water, but the potential consumers have got no money to pay for it, ergo, no demand.

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  • Mr Flibble @2; not all university graduates are equal and a degree these days does not guarantee a decent wage, Unfortunately around half of university graduates these days were led down the garden path of politicians false promises and effectively funded their own unemployment. They have been used by statistic manipulating politicians over the last 15-20 years who have used education as a convenient mask to plaster over the real state of the job market for young people in the UK.

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  • There’s no way 1/2 ftbers have a 40% deposit.

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