Is 2008 going to be a good year to buy for first time buyers?
January 12, 2008
Over recent years first time buyers in the UK have really had to suffer when it comes to getting onto the property ladder, with many finding it impossible to get themselves onto the property ladder because of the increasing costs involved. In fact, figures have shown that fewer and fewer people are finding it possible to get onto the property ladder for the first time without having to pool funds with family or friends, which brings with it its own problems.
House prices in the UK have rocketed over recent years, and this is has been good news for existing homeowners who have seen their equity levels go through the roof. However, for those that were hoping to get onto the property ladder for the first time these rocketing house prices spelled disaster, and many were forced into renting property and forgetting about their dream of homeownership.
In the past people that were purchasing property for the first time were generally in their early twenties. However, over recent years more and more people have been in their thirties when purchasing property, and some do not even manage it by their forties and beyond, simply because of all of the problems that stand in their way these days.
Rocketing house prices have made it very difficult for people to afford to buy a property for the first time, with no equity from a previous property to help them. In fact, lenders have had to change the way that they lend money in order to help first time buyers stand any chance, offering higher income multiples and longer repayment periods to increase affordability. Although this has helped some first time buyers get onto the property market it has still resulted in real affordability problems.
In addition to soaring house prices the last couple of years has seen interest rates rocket, with a series of five interest rate rises between August 2006 and July 2007, which has resulted in increased affordability problems for first time buyers. All in all homeownership prospects for first time buyers have looked very bleak.
The good news is that 2008 may see a turnaround for first time buyers, with many experts predicting various changes could make homeownership easier for first time buyers. Over the last couple of months property values and asking prices on properties in the UK have fallen, and this downward trend is expected to continue over the course of the year. In addition to this December saw interest rates fall for the first time in two year, with a rate cut of 0.25%, and experts predict that interest rates could fall another two or three times over the coming year.
Keeping in mind the expected property value reductions coupled with expected interest rate cuts all due over the course of 2008 first time buyers could at last find that they have some hope of getting onto the property ladder, which could see a boost in the somewhat subdued housing market over the coming years
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