Is it the ‘how’ not the ‘where’ for first time buyers
PUBLISHED: 15:15 20 July 2017 | UPDATED: 15:17 20 July 2017
© 2016 John Watt
Kirsty and Phil are entertaining but reinforced the cliché in relation to property of “Location, Location, Location” while for many first-time buyers it is the “how, how , how” rather more than the where.
The Northern Rock building Society was lending up to 115% of the value of a property prior to the financial crisis of 2007. It was bound to end in tears and, thankfully, Northern Rock is no more. In 2007 there were 359,900 first-time buyers entering the market, down from 402,800 in 2006. After Northern Rock’s demise we heard the very loud noise of stable doors being slammed long after that particular horse had bolted. Banks and building societies having got it wrong compounded their mistakes by insisting on unrealistically large deposits after the crash and the number of first-time buyers fell to 192,300 in 2008. The good news is that numbers have climbed back to 335,750 in 2016, though the average deposit has risen from £15,168 then to £32,321 last year.
Most people aspire to be homeowners but currently 35% of people surveyed in an IF report said that they could not afford to save a penny towards a deposit. According to the Halifax the average age of a first-time buyer is now 30 outside London and the average price paid in 2016 was £200,000.
“Help to Buy” introduced by the last government has proved popular and effective in helping first timers. The Catch 22 of the housing market is that if you introduce successful schemes that help more people to buy, it can push up prices, thereby making house purchase less attainable.
Anyone who works in development is as cynical about government as they are about us. Figures are bandied around by all parties without any clear idea on how to deliver. David Cameron (remember him?) talked of 200,000 starter homes by 2020 to be sold with a minimum 20 percent discount. For once there may be the germ of an idea here. Planning imposes what is called a Section 106 Agreement on landowners and developers. This commits them to financial contributions for things like education and affordable housing.
Let’s allow builders and local authorities to have flexible discussions to provide discounted homes for first-time buyers that will always be sold at an agreed discount to the market. The biggest challenge in Norfolk is solving the problem for those working in low paid industries such as food production and hospitality. Combine discounted first-time buyer properties, perhaps with the re-introduction of tax relief on mortgages and the abolition of all stamp duty for first-time buyers and it might be a start.
This column is sponsored by Newbury New Homes.