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First Time Buyers Crisis

First Time Buyers Crisis

FIRST TIME BUYERS CRISIS

A survey has been published today that shows the U.K first time buyers crisis has hit, with the toughest housing market in Europe they are really struggling to get on the ladder.

The survey done by ING which surveyed nearly 15,000 people across Europe showed there is a first time buyers crisis across Europe not just the U.K, Luxembourg, Turkey and Spain were amongst the hardest markets for first time buyers with the prospect of getting on the ladder worsening year on year.

The U.K house price has seen an increase of around 8 per cent from 2014 to 2015 which is eight times the European average, Germany is the place that people are less concerned about the hardship of getting on the property ladder but even there 60 per cent of people are struggling with achieving their goal of buying a house.

This first time buyers crisis is not just confined to Europe, 89 per cent of people in Australia think it’s getting harder to get on the property ladder also people in USA are struggling with 72 per cent of people finding it tough to get in the property market.

Usually a strong housing market shows signs of economic prosperity but seven in 10 home owners believe that housing has become so unaffordable that to overt a first time buyers crisis that the house prices have to fall in line with affordability.

The Rental market has had a sharp rise as people aren’t being able to afford to buy homes, the price of rent increased dramatically. The study shows that 75% of tenants are looking at expensive housing blocks to achieve their goal of home ownership.

Ian Bright, a senior economist at ING, said: ‘Across the continent and in the US and Australia, consumers hold the view that first time-buyers are at risk of having the door to home ownership slammed in their face.

‘The burgeoning economic recovery across the continent comes into play here. This will improve people’s lives in many ways but the ING International Survey shows something needs to be done if the next generation is to benefit from bricks and mortar.

It’s been argued that more efficient use of existing housing could help the property market. The challenges listed in the U.K is that people’s life expectancies are greater and the number of people living alone has rose dramatically were boosting demand for housing and subsequently lowering supply and increasing demand for housing which causes the steep increase in property prices, this has reinforced young people’s tendencies for renting.

A young homebuyer would need to more than double their earnings to borrow a largest enough mortgage just buy an average starter home, given the average deposit of 17 per cent a mortgage of around 175k would be required for a first time buyer. Most mortgage lenders will lend higher than 4.5 times salary in terms of size of the loan so that would require earnings of £38,917 a year and the average income for 20-24-year-old is £16,400 a year so they would need an extra £22,517 a year to afford such a home, in our opinion the first time buyers crisis is here to stay.

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