News Review: Property
First-time buyers are still struggling to buy
by Nigel Stockton, financial services director, Countrywide
there have been a few interesting reports out recently, highlighting the struggles faced by those hoping to get onto - or move up - the ladder. the overriding sentiment is one of concern about growth – or rather the lack of it. First, the council of
mortgage Lenders announced that the number of new buy- to-let loans rose by 16% in Q3, with the value up by 19% to £3.8bn. Still not even half of previous peaks, but heading in the right direction. Lloyds said that they expect the buy- to-let sector will grow another 20% in 2012. this seems like a fair prediction - our own Q3 rental market review found that there’s been a slight increase in the proportion of landlords that are first- time investors, evidence that people still view property as a strong investment. tenant demand also continues to rise - average rental properties are now snapped up in a record 12.7 days (compared to 13.5 days in Q3 2010) and demand is up by 8% year-on-year, with five tenants competing for each available home. How far can it go? Well,
according to a grainger survey, 54% people expect that there to be more renters than homeowners in 15 years’ time, with only 31% believing that opportunities for first- time buyers will improve over the next few years. it’s sad that nearly a
third feel first-time buyer opportunities look stale for the near future, but regardless of mortgage and stock availability, i doubt the appetite to own property in the uK will disappear entirely. the flexibility of renting offers more benefits to some (i’m a prime example of that) but the majority, by hook or by crook will find a way to get on to the ladder. HSBc’s investment in
the first-time buyer arena, aldermore’s
innovative
100% family guarantor and nationwide’s 90% loan to value and new build specific products are going to help all channels. (come on Lloyds Banking group, give us poor brokers access to your lend-a- hand product set!)
Government help the government has also provided more support but they must publicise it well - rightmove claims only 37% of first-time buyers have not heard of FirstBuy. i’m watching for local authority and housing association action on how they can get the bottom end of the market moving again before i look too carefully at the help for the private/owned sector of the market. the government will need to focus - our economy relies on it too much. expectations are changing,
as they do after/during/before every recession. Lower rung buyers will be aware that 100% + LtV products were widely available as little as four years ago and have only ever experienced house prices and rents rising, so it’s no surprise that the majority of consumers can’t imagine
6 mortgage introducer DECEMBER 2011
getting on the ladder in their twenties anymore.
More bad news for all unfortunately, the widespread uK unemployment pred- ictions were spot on – despite a 17 year high, it seems that we haven’t seen the worst of it yet.
“54% of people expect there to be more renters than homeowners in 15 years’ time, with only 31% believing that opportunities for first-time buyers will improve over the next few years”
We’re really facing a “lost
generation” again as under 25 unemployment rises over 1m – we’re even worse than France for goodness sake! coming from coventry in the late 70s (Ghost Town by the Specials was a documentary) i know from experience that quite often some people may never work, never mind own houses. We’ll need to look closely at the shift in dSS renting and the impact on affordable housing and stock going forward. no good news for those on
the next rung of the ladder either, with HSBc claiming that the 360,000 first-time buyers who bought in 2007 will need around £27,000 to trade up now – a combination of the effects of a 7% fall in house values, plus stamp duty fees, raising a substantial
deposit and the cost of selling their current home. it’s stories like this that
make renting look like an alternative.
Lending 2012 my lending forecast for 2012 is “as flat as a pancake” and it’s nice to be in good company as Barclays and nationwide recently announced their gross lending predictions for next year, with both expecting it to remain around the £130bn - £135bn mark. as was also played out at expo – all bets are off if it comes to euro dismantling – we must then look closely at banks who have significant euro exposure. But i’m optimistic about stability in 2012 – though i’m not expecting significant, if any, growth. However, Virgin money
has just stirred up a bit of excitement in the sector, announcing their purchase of northern rock. it might not make an immediate difference to the six big boys and their 80% share of the market and overall lending volumes, but hopefully it will accelerate the creation of greater competition in the banking sector. We brokers see how consumers choose between mortgage providers and the Virgin brand is synonymous with championing the consumer, much as northern rock did in the 90s. Virgin has also indicated that the intermediary channel
is
important to them so that should add a bit of healthy competition, plus they may come with some wrinkles on standard products that make us all look closely at what we are selling and lending!
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