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.
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.
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.