New thinking may be needed to help tomorrow's homeowners, suggests research from Datamonitor, as Lon...
New thinking may be needed to help tomorrow's homeowners, suggests research from Datamonitor, as London's first-time buyers are now paying an average £37,123 or 264% higher than five years ago for their first home.
Elsewhere across the country, the average deposit paid by new homeowners seeking their first property has risen by at least 250% compared to 1998 to £22,547.
As a result of increasing deposits required and a boom in property prices, individuals looking to get onto the property ladder are finding it more and more difficult, says Datamonitor, so major changes from the government and property developers to provide this and the next generation of homeowners with affordable places to live.
According to the statistics presented, first-time buyers accounted for just 38% of home mortgage advanced in 2002 and 29% to June this year, which is also down 10% from 48% in 1998, so the government, lenders and developers to look again at the market to prevent the options open to first-time buyers from falling further.
"First time buyers are staying away from the market," says Alex Boorman, financial Analyst at Datamonitor.
"Property prices are being buoyed by other areas such as buy-to-let - where, ironically, growth is being fuelled by potential first time buyers who can't afford today's prices. Until all three parties take action the problem will remain and could very well get worse," he adds.
Datamonitor points out that part of the problem has been the huge housing boom which at the end of 2002 valued the average house price in the UK at £121,426, compared with £73,010 in 1998.
It is also the percentage of deposit required which seems to have increased, as new owners borrowed 83% in 1998 compared with just 77% last year.
Former owner-occupiers are still paying an average deposit of 36%, as the average loan amount is around 64% of the property's value.
Datamonitor's answer to the crisis is the government should increase its housebuilding initiatives beyond the focus on 'key' workers by presenting something to increase building and lower prices.
This may not be good news for other homeowners, as it has the potential to significantly slow house price rises and demand, but it may encourage people to move to areas such as the North, says Datamonitor, where the slowdown and rises have been relatively steady.
Unless innovative new products are produced by high-street banks and gain more profile, the financial services sector is not addressing the issue sufficiently for tomorrow's buyers, adds the analysis firm.
A copy of the full report can be purchased from Datamonitor.
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