New flat-pack housing could ease house price pressure for first time buyers

31 January 2008 / by Joy Tibbs
With housing still proving unaffordable for many looking to buy property, new flat-back homes launched by Swedish furniture and accessories group Ikea and UK property company Live Smart could offer a refreshing change.

A new flat-pack "village" was unveiled in Gateshead, Tyneside, on January 30, comprising 93 units including a two-bedroom show apartment. The properties will be available to first-time buyers with earnings in the £15,000 to £35,000 bracket. Prices range from around £100,000 to £150,000.

This may offer some hope for those struggling to get on the property ladder. A new Nationwide study shows that house prices were fairly static in January, down just 0.1 per cent compared with December. Prices were up 4.2 per cent year-on-year compared with a 4.8 per cent annual rise in December. The average price of a typical property stood at £180,473 in January, up £7,249 compared with January 2007.

In an overview of the last 12 months, senior economist, Martin Gahbauer, says: "The drop in demand was particularly acute among first time buyers, who found it increasingly difficult to raise the deposits needed to climb onto the housing ladder."

However, Mr Gahbauer suggests that the housing market has become more accessible to buyers since September 2007. He says: "This is not altogether surprising, as some potential buyers who had been priced out of the market may have recently had their interest spurred by expectations of lower interest rates in 2008 and the possibility of their bargaining position improving in looser market conditions."

As the year progresses, a key factor to watch will be how much pent-up demand returns to explore the market, and how much of this is translated into actual housing transactions."

Meanwhile, Nationwide predicts that the buy-to-let sector may continue to struggle in 2008. However, Mr Gahbauer comments that: "While Nationwide is of the view that new demand from buy-to-let investors is likely to weaken in 2008, we do not believe that the long-term fundamentals of buy-to-let are necessarily as poor as recent commentary may suggest."

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