First time buyers leaving the mortgage market

First time buyers leaving the mortgage market

18 December 2009 / by Rachael Stiles

The proportion of first time buyers in the mortgage market has fallen to its lowest level since this time last year, according to the National Association of Estate Agents.

The NAEA's monthly market survey reveals that first time buyer mortgage customers accounted for 19 per cent of registered buyers in November, the lowest proportion since December 2008.

The figures are not as stark as last year, as first time buyers represented just 11 per cent of registered buyers a year ago.

However, the number of first time buyers trying to get a foot on the property ladder has dropped off significantly since the summer – they represented 43 per cent of buyers six months ago.

Commenting on the figures, Gary Smith, president of the NAEA, said that he is not surprised about the fall in first time buyer mortgage customers: "The decline in the first time buyer segment is exactly what the NAEA anticipated and warned the Government about some months ago," he said.

Mr Smith blames the decline on the Government's decision not to extend the holiday stamp duty, which finishes at the end of December.

"Any tax holidays result in a distortion in the market and in the case of Stamp Duty needed to be carefully managed and phased out rather than falling of a cliff."

And, he added, this could have detrimental effects on the wider housing market: "Unfortunately as first time buyers often form the foundation of selling chains there could be repercussion throughout the sector."

But November's results do not reveal a bleak portrayal of conditions in the wider housing market, as estate agents reported that, in contrast to seasonal patterns, average house sales remained steady at a rate of eight per month, per branch.

Meanwhile, the number of houses available for sale increased slightly, from 57 per branch in October, to 58 in November.

Mr Smith added: "It is encouraging to see that the market is in a stronger and more stable position than it was twelve months ago. To sustain these improvements, the Government should put more pressure on banks to ensure lending is available."

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