Author Topic: Just 3% Of Homebuyers Are Under 30  (Read 2752 times)

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Just 3% Of Homebuyers Are Under 30
« on: July 23, 2014, 10:35:38 am »
The number of young (aged 18-30) homebuyers has reached an all time low of just 3% down from 12% last August. 
A combination of low and stagnant wages, rising property prices and reforms limiting the availability of mortgages and tighter rules on borrowing all contributing to a perfect storm for keeping the young off the property ladder.

Now it is becoming increasingly common for young people to still be living in their childhood bedroom when they are 35.  The Office of National Statistics says that 3.3million of those aged 20-34 are still living with their parents.  The average price of a home bought by first time buyers is currently £202,000.  With the new rules now limiting the amount that can be borrowed to buy a home to 4.5 times salary, workers in their 20's on the average salary of £21,200 would need a deposit of £106,600 to buy the average home.

The government's flagship 'Help To Buy' is clearly failing.
Young people are being priced out of the housing market even with the state funding up to 20% of the price of a new build home.  The main reason being that house builders have used this as a marketing opportunity to INCREASE the prices they charge all but wiping out the government's so called "help."

This may end up being a blessing in disguise for many currently being priced out.
When the market falls as it will when interest rates rise, they will be protected from the negative equity that many who have over stretched themselves to buy a new home will be exposed to having paid top dollar for their new home just before the bubble bursts.

Finally Stamp Duty is also making it more expensive to buy a home.  Before 1997, stamp duty was charged at 1% any home over £60,000. Today the 1% rate applies only to homes sold between £125,000 and £250,000.  The stamp duty rate of 3% is charged on all homes sold over £250,000.

No changes to the thresholds have been made to allow for the rise in house prices since the new rates were introduced.  It is not surprising that revenue generated from stamp duty has increased from £255million 20 years ago to £5,600million a year today.  If the thresholds had increased to allow for inflation, the 3% threshold would today, start at homes sold for more than £645,000 according to Lloyds.
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