Housing market on the rocks after slump in first-time purchases
24 February 2004
Reduced numbers of first-time buyers could undermine the stability of the housing market, new research has revealed.
A report published in Shelter's Roof magazine claims that, by the end of 2004, buying a first home could be 46 per cent less affordable than it was 10 years ago.
Figures show a huge fall in sales at the bottom end of the market over the past two years, with the average price paid by first-time buyers soaring from £58,000 to £165,000 in the past ten years. Average income over the same period has only risen from £20,000 to £40,180.
First-time buyers represented only 29 per cent of all buyers last year, compared with 38 per cent in 2002 and 50 per cent in 2001.
Julian Birch, deputy director of Roof, said: "Frenzied buy-to-let investment by existing owners has made up for the fall in the number of first-time buyers.
"First-time buyers and buy-to-let investors together represent the new money coming into the market. Buy-to-let's share of this new investment increased from seven per cent in 2001 to 24 per cent in 2003."
The typical mortgage is now 3.16 times earnings compared with 2.43 a decade ago, while mortgage offers of four and five times borrowers' salaries have now become commonplace.