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‘Perfect storm’ prevents first-time buyers access to homeownership

by: Pad Bamford, business development director, Genworth Financial
  • 24/08/2015
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‘Perfect storm’ prevents first-time buyers access to homeownership
The shortfall in first-time buyers caused by the credit crunch is further proof action is needed on the provision of new homes and the low-deposit arena, writes Pad Bamford.

Thinking of taking a few day trips this summer? Or perhaps you’re opting for the full ‘staycation’? Well, as you’re wandering around various parts of the country think about the people you meet who actually live in these villages, towns and cities, and consider what we might refer to as the ‘housing gap’ – in particular the opportunity for first-time buyers to get on the ladder.

Perhaps you’ll be taking a trip to the coast, down to Brighton? Our own research reveals that, in comparison to the number of first-time buyers who bought homes between 1974 and 2006, since 2007 the population within a district greater than the size of Brighton and Hove (281,100) have been unable to do the same. Effectively in the South East region there has been a shortfall of first-time buyers of 310,967 in the last eight years – it’s quite incredible really.

Maybe the coast is not for you, and instead you’ll be going to Harrogate in Yorkshire to take in the many tea rooms – well again, in the region of Yorkshire and Humber, 160,136 first-time buyers make up the current shortfall. That’s more than the entire population of Harrogate (157,267). And it’s the same picture across the whole of England – in the North West it’s more than the population of St Helens (177,200), in the West Midlands it’s more than Warwick (139,400) and in the South West it’s more than Exeter (124,300).

When you put it in these terms, you’ll be able to see the intense difficulties that first-time buyers have faced since the credit crunch – there are entire cities/towns of potential purchasers who, pre-crisis, would have got onto the ladder but now find themselves wondering how it’s possible.

And while the Help to Buy Scheme has helped, those in that first-time buyer age group (18-45) find themselves facing something of a ‘perfect storm’ of low levels of housing supply and a shortage of high LTV loans – the traditional route to market for those new to homeownership.

If we were in any doubts about the need for further action and joined-up thinking around the provision of more homes and ongoing action to ensure lenders increase their appetite in the low-deposit mortgage space then it is perhaps these shortfall numbers that provide it. Without a credible strategy for the future from all stakeholders then the numbers of disenfranchised first-timers are only going to grow.

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