First Time Buyer Deposits
The UK was one of the few countries which experienced a rise in house prices in 2009. Some countries like Ireland, Spain and Central Europe experienced record falls of between 27 and 53% (according to RICS European Housing Review 2010)
However, the rise in house prices will come as little comfort for first time buyers based in the UK. Expensive house prices and the continuation of mortgage rationing means first time buyers are being asked for a record level of deposit before getting a mortgage.
The Council of Mortgage lenders state that the average first time deposit is £34,000 – equivalent to a full year’s salary. This is nearly triple the average deposit of three years ago, when the average deposit was a more manageable £12,000.
The Council of Mortgage Lenders predict that this trend of a large deposit is unlikely to change. Banks are still repairing their balance sheets (despite high profits from some such as Barclays) They also predict that home ownership rates are likely to fall. Home ownership rates have already fallen to 68%, after peaking at 71% in 2000.
Last month saw the first reported house price fall for 10 months. But, although prices may slip back a little this year, it is unlikely to solve the long term problem of supply shortages and expensive house prices.
Unsurprisingly 80% of first time buyers received help from their parents in getting their first deposit.
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