British first-time buyers plunge to lowest in almost twenty years

British first-time buyers plunge to lowest in almost twenty years

04-23-2010 06:05

The number of UK first-time buyers declined to the lowest in nearly twenty years. This is the result of more stringent home loan conditions which decrease the ability for Britons to buy a house, according to GfK NOP. Property prices have climbed again due to a lack of supply.

First-time buyers

Approximately 347.000 mortgage loans have been taken out in the year that ended in February. In the period 2004 – 2005, over 700.000 home loans were taken out, the market research agency reports. This is the lowest number since record keeping started in 1992.

Stringent home loan conditions

Financial institutions have tightened their credit conditions. They try to restore their balance sheets after the financial crisis resulted in the most intense downturn in the UK. The government cancelled a tax on house purchases with a value of less than €261.917. This measure was taken to support Britons who buy their first house. However, the majority of the first-time buyers don’t have the 25% deposit that lenders normally require, according to the London-based research agency.

GfK research agency

Ben Steer, financial director at GfK, stated: “Many lenders have become too expensive due to  more cautiousness on the housing market. Banks should offer products that are suitable for young people. At the same time, these products should not result in the conditions that caused the financial crisis.”

House shortage

House prices in the United Kingdom rise again due to the shortage of houses for sale. Previously, property prices declined by approximately a fifth from their peak in 2007. Rightmove Plc. reported that home sellers lifted prices for April by the largest percentage in 36 months. The median house price in Wales and England rose by 2.6% in comparison to March, reaching a €246.738 level.