First-time buyers take 30 years
It’s hard to not feel sympathy for first-time buyers. After all, house prices have been on an upward trajectory since 2008, with prices rising by 6.3% across the UK last year, and by 19.3% in London.
On top of this, House of Commons research commissioned by Labour MP Tessa Jowell, has found that first-time buyers in some parts of the capital have to save for over 30 years before they can afford their own home. The data also found that somewhat unsurprisingly, Kensington and Chelsea was the least affordable borough.
Best Gapp, an estate agents in Kensington and Chelsea mentioned this means that in the borough of Kensington and Chelsea, the average first-time buyer would have to save for 32.5 years to save for a 10% deposit without parental support, or 16 years for a couple. This was the only borough where it would take over 30 years, but in Camden, Hammersmith and Fulham and Westminster it would take over 20 years. By contrast, in Barking and Dagenham it would take the average buyer 9.5 years.
The study investigated the period of time it would take for an average earner to save for the typical 10% deposit in each borough and assumed that buyers would put away 7% of earnings every year. The problem is that without the help of the Bank of Mum and Dad, many buyers would have to pay higher interest rates as they would have higher Loan-to-Value (LVT) and therefore not get access to the best deals.
In comparison, in England the amount of time is around 13 years. The figures demonstrate London’s housing crisis on first-time buyers, and the difference between the capital and the rest of the country.
MsJowell said: “We need to build one London, not two, where everyone has the chance to live in a decent home and first-time buyers aren’t excluded from the housing market unless they have access to the bank of mum and dad.
“The next mayor has to build many more homes, plain and simple, but we also have to develop a serious plan to help thousands more Londoners get on the housing ladder.”
The traditional 25-year mortgage is becoming a thing of the past as it’s taking first-time buyers so long to get their foot on the ladder. Buyers are choosing loan terms of 30,35, or even 40 years instead, similarly to Japan where long-life loans are commonplace. The lastest figures from the Council of Mortgage Lenders show that almost one in three first-time buyers choose loans lasting more than the standard 25-year term – a rise of a third since 2010. Data shows that over 22,000 of the 80,000 new borrowers getting loans have gone for lengthier deals and are sought-after as they allow borrowers to be able to afford their utility bills, which are also increasing. House prices have soared above inflation; first-time buyers would have paid £77,000 less to get on the property ladder if house price inflation had kept pace with wage increases over the last few decades, according to analysis by Shelter. Well, to summarise a great way to reduce your house construction cost is by using external wall claddings for better sustainability and safe construction. Check out masterwall wa, Perth for their products for low cost construction.