Over the past decade we have seen a rapid growth in the property market and house prices have continued to rise, contrastingly, salaries have not increased in the same way. The disparity between income and property prices makes it rather difficult for those on medium to lower income to acquire their own home, most of whom are just starting out in their working life. The latest report clearly indicates that people aged between 25-34 are less likely to own a property now, against the market of 1995-1996. Similarly, in the market of 1995 -1996, 65% of the middle earners who earned between £22,200 – £30,600 owned their own homes, unsurprisingly this figure has dropped to 27% in 2015-2016, decline of 38% in 20 years. This demonstrates a considerable gap between the number of people who own their homes today and those that did 20 years ago. Undoubtedly, those on the lower income group find it most difficult to purchase their own property today.
Like any other business, if demand in the property market falls or slows down, undoubtedly property supply will naturally slow down, this ultimately means that property prices will drop and will cause havoc to the market. Considering the recent inflation rate and the young people’s average salary, first time buyers and young people are being deprived of owning their own homes, due to soaring house prices and low income.
Understandably, if properties are not being sold at the projected price, sellers will have to accept their property is not worth as much as they anticipated and will have to either reduce their property price to achieve a sale or not to accept a sale at all. Conceivably, it appears that vendors are not prepared to sell their properties at a lower price and perhaps are delaying sales, in hope of securing a higher sale price in the future. As a result, the property market is affected and evidently the latest figures show that property prices are falling on a yearly and even monthly basis, according to Lender Index a property is valued at £214,745.
Equally, Nationwide Building Society’s latest figures shows that the annual price growth fell from 2.5% to 2%, the biggest monthly fall since July 2012. Nationwide’s chief economist said; “Subdued economic activity and ongoing pressure on household budget is likely to continue to exert a modest drag on house price growth and market activity this year, though borrowing costs are likely to remain low”.
Despite the slow progress in the property sector, recent study shows that property size has shrunk over the past 40 years by 20% as families are squeezing into smaller homes. It is difficult to ascertain the reason behind such transformation; however rising property prices may be an influential factor. This means that not only property owners are not getting the same value for their money as they would have 40 years ago but are paying significant fold the purchase price.
In view of the substantial difference between income and house prices, it is imperative and essential to understand the worrying factor behind the fall in the property market and the different ways to help young people and first-time buyers to climb on to the property ladder. Promisingly, recent statistics depict that the property market is currently being driven mainly by first time buyers. This is great news for the young and first-time buyers and rather a more optimistic view of the property market in its entirety.
It is vital that such class of people are made aware of all opportunities so that any avenue available is utilised to its fullest. The Mayor of London, Sadiq Khan, has recently introduced a new housing partnership which will bring 5,000 new houses throughout London. Such invention will create more affordable homes to be built and will enable those less able a chance to purchase their own homes. This is a great innovation to help young people and first-time buyers and we need to see more of this.
We aim and focus to find alternative ways and methods to help and assist the young and first-time buyers. At the Sethi Partnership Solicitors we are committed to putting your needs and requirements first. If you are a first time buyer looking to purchase and require sound legal advice, reach out to us and we can guide you each step of the way through your journey.
Nabil Amoni – Para Legal/Conveyancing
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“This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.”