First time buyers face steep property challenge

Prices for first time buyers have risen by almost 3% to £187,911. Four out of five first time buyers are looking to purchase property on their own rather than with a partner. With the average first time buyer mortgage now being sought at £133,943, this means first time buyers are needing to put together a deposit equivalent to two years’ average earnings. Median gross annual earnings for those in full time employment, is £24,000 according to National Statistics’ annual survey of hours and earnings.

Overall average house values have risen by just 2.3% over the 12 months to November 2007. But the average property value of £227,484 conceals some sharp variations in the market sectors. Prices for home movers have actually come down fractionally while the average property value of those seeking to remortgage has risen by 8.6% to £256,868.

Robin Amlôt, Senior Editor of Moneyextra.com, said, “The sharp rise in property values of those remortgaging may be an indicator of how the credit crunch is extending beyond the traditionally vulnerable sectors of society.”

“At the same time we’ve also seen an increase of almost a fifth (18.8%) in the average value of secured loans being sought over the last 12 months. The average secured loan is now £31,578, up from £26,584 in November 2006.

“The outlook for the mortgage market in 2008 is fairly grim. While interest rates appear certain to be significantly lower in 12 months time we may have an uncomfortable journey getting there.”