Merryn's Blog

First-time buyers are shut out of the housing market

There are supposedly a lot of new mortgage products for house buyers with small deposits. But they are few and far-between. And the number of first time buyers is now at its lowest since the peak of the property boom.

There has been much talk recently of the rise in the number of mortgage products available to those with small deposits. But the existence of these products is beginning to look rather more theoretical than actual.

If they were really being granted to borrowers, rather than just trumpeted in the press, you might expect to see the number of first time buyers entering the market rising. But you aren't seeing anything of the sort. Instead, according to the latest numbers out from the Council of Mortgage Lenders, the number of first time buyers was 17% lower in April than in March: they now make up the lowest proportion of buyers since 2007 (the peak of the bubble, and the time when first time buyers were least likely to be able to afford a house of any kind). The typical first time buyer is still putting down a 25% deposit.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Easter often causes disruption to the market, so we have to take that into account. But even so, it's hard to take much good news from these numbers from the house price bull perspective anyway.

We've written here before that we expect rising supply to keep house prices down from here on and that does appear to be happening already partly due to the end of Hips, partly thanks to fears over CGT, and partly just because there comes a point when people waiting to sell just don't want to wait any more.

Advertisement
Advertisement - Article continues below

The various indices are sending as usual mixed messages about prices, with Acadametrics showing a 0.2% fall in house prices last month and the Land Registry coming up with a 0.2% rise.

But look at the supply numbers and you can begin to get a sense of what might happen next: in April, says property expert Henry Pryor, the number of sale instructions rose by 78% over the previous year (121,000 vs 68,000). And while sales have also risen, they have not done so at the same rate: the latest figures suggest they are up by 24%, says Pryor.

One more thing we might like to consider as the emergency budget and the day of reckoning for the public sector draws closer is this: according to a report in the Guardian, 25% of the UK's homeowners are public sector workers. How many of them have overstretched themselves on the basis that their salaries and benefits can only ever rise; that their jobs are jobs for life; and that the gold plate on their pensions will never tarnish? And how many of them will find themselves having to move to look for private sector work over the next few years? I guess we'll soon find out.

Advertisement

Recommended

Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/investments/property/buy-to-let/600849/come-back-buy-to-letters-all-is-forgiven
Buy to let

Come back buy-to-letters, all is forgiven

The government is winning its war against small private buy-to-let landlords. But who benefits?
23 Feb 2020
Visit/economy/people/600864/rishi-sunak-the-maharaja-of-the-yorkshire-dales
People

Rishi Sunak: the maharaja of the Yorkshire Dales

Rishi Sunak is taking the reins of the world’s fifth-largest economy at a crucial juncture. The unflashy but likeable youngster may be just the man fo…
20 Feb 2020
Visit/economy/uk-economy/600857/what-is-britains-new-economic-policy
UK Economy

What is Britain’s new economic policy?

At the moment, Britain doesn’t seem to have an economic policy. But radical-seeming announcements and the surprise ousting of the chancellor portend m…
20 Feb 2020

Most Popular

Visit/investments/commodities/gold/600874/gold-is-at-its-highest-level-in-years-heres-how-to-invest
Gold

Gold is at its highest level in years – here’s how to invest

Gold's rise at a time when the dollar is unnervingly strong isn't unheard of – but it is curious. John Stepek explains what's going on, and what it me…
21 Feb 2020
Visit/investments/stocks-and-shares/600863/sirius-minerals-anglo-american-takeover
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Visit/economy/global-economy/600876/the-charts-that-matter-its-starting-to-look-a-little-unhinged-out
Global Economy

The charts that matter: it’s starting to look a little unhinged out there

Things aren't normal in the markets right now, says John Stepek. Here, he looks at the charts that matter most to the global economy for clues to what…
22 Feb 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020