Housing & Mortgage round up: Renters finding the going tough, whilst demand amongst homebuyers rises


Housing & mortgage round up_istockphotoNo house price surveys this week, but still plenty of housing news to bring you, dominated by an increase in house buying activity, plus news rents continue to increase.

Housing demand at four year high

New figures, from the Royal Institution of Chartered Surveyors (Rics), have shown demand for homes in the UK has risen to the highest level since 2009.

The research also showed that the majority of Rics members are reporting rising property prices, the first time this has happened since 2010.

According to Rics, the government’s various housing schemes, including Help to Buy, has helped to push up demand for houses. Experts also believe the Funding for Lending Scheme, which has helped to reduce mortgage interest rates, has also had a positive effect on the housing market.

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Peter Bolton King, Global Residential Director at Rics, said: “It is encouraging to see government initiatives are having an impact on the property market.”

Bolton King continued: “Help to Buy in combination with the Funding for Lending Scheme appears to be giving the market a shot in the arm,” he said.

First time buyers on the rise

Figures from the Council of Mortgage Lenders (CML) show the number of first time buyers has risen sharply, again in part due to the Help to Buy Scheme.

According to the CML, the number of first time buyers rose by a massive 20.1% in March, compared to February, with 19,100 first time buyers taking out mortgages. The figure is still well down on the same time last year, which was artificially inflated due to over 24,000 first time buyers rushing to complete on their purchase before the end of the stamp duty holiday.

The first time buyer picture was repeated more generally, with the number of new mortgages being granted to existing homeowners up by 14.8% on the previous month. The number of remortgages was also up in March, although down on the same time last year.

Commenting on the data, Paul Smee, Director General of the CML, said: “First-time buyer activity in the first quarter was nearly at the same level as last year – when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.”

Smee continued: “More borrowers are taking out higher loan-to-value mortgages than any other time in the last four years, a sign that lenders are open for business, and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder.”

Rents continue to rise

Further evidence emerged this week to demonstrate the tough time being had by tenants, as average rents rose yet again.

Figures released by LSL Property Services, which owns the Your Move estate agency chain, show the average rate in the private sector has risen by 0.2% in March, to £736 per month and up 3.9% over the past 12 months.

London has seen the largest rise, with rents increasing by 7.6%, to an average of £1,110 per month.

LSL also revealed that for the first time since November 2011 rents are up year on year in all areas of the country, heaping pressure on would-be first time buyers, who are often in rented accommodation and struggling to save for a deposit.

Millions struggle with cost of housing

In the same week that LSL Property Services revealed rents have risen in all areas of the UK, new research from Resolution Foundation has found many homeowners and tenants are struggling with the cost of housing.

Resolution Foundation found 1.3 million low to middle income households are spending more than a third of their net income on housing costs, including rent, mortgage repayments and maintenance. Housing experts generally consider that spending more than 35% of net income on housing costs is unaffordable.

According to the figures, around one in four low to middle earners, split roughly equally between renters and homeowners, are struggling with the cost of housing, confirming the data from LSL. Unsurprisingly the families finding it hardest to meet the cost of housing live in London or the South East.

Vidhya Alakeson of the Resolution Foundation, said: “Many families are struggling to find any type of housing which fits both their needs and their budget. Often they are making difficult choices which mean going without other essentials to pay their housing bills or living in overcrowded conditions – all this at a time when other living costs are rising.”

Alakeson continued: “We’ve become used to the idea that buying a property is now an impossible dream for millions of people on low to middle incomes – in a typical case it would take 22 years just to save the deposit.

“But, increasingly, private rent is also becoming unaffordable, even though, for many families, it is the only option.”
You can read more about the report from Resolution Foundation by clicking here.

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