Tue 02 Aug 2016
FIRST TIME BUYERS PAYING A HIGHER PRICE?
Over the last 4 years, the average price paid across England by first-time buyers has increased by over £40,000, according to new analysis of official figures by the Resolution Foundation.
That represents a 28pc increase over the period, bringing the average price paid nationally, up to just over £196,000. In Cambridgeshire, this figure has risen to 40%. The graph below highlights how this concern is affecting our home ownership demographics, showing the huge drop in homeowners within the ‘45 years and below’ age group, as first time buyers struggle to get on the ladder.
The first hurdle for many is the deposit. A minimum of 5% is required to take advantage of schemes such as Help to Buy (more on this below) - which, given the surge in average house prices, is no mean feat. In St Neots, for example, you would need to have a deposit of £10,500 to meet the average property purchase price of £210,000. However, the Government has stepped up to try and make saving easier with the introduction of the Help to Buy ISA scheme – for every £200 saved, they will also contribute £50.
With your 5% saved up, under the Help to Buy Scheme the Government will lend a further 20% deposit, which remains interest free for the first 5 years. This means a mortgage would only be required for 75% of the property purchase price. After year five, you are required to pay 1.75% interest on the shared equity loan, which rises slowly each year. Obviously you can choose to repay the 20% in full, or sell up - along with their share of any increase in the home’s value.
David Hawkes, Sales Manager at Lovetts, said "within the PE19 and PE28 area, over 300 people took up the option of the Help to Buy Scheme in its first 3 years. Our feeling this that we'll see more and more people go down this route, especially as interest rates drop, mortgage deals improve and people become more aware of the scheme".
"With a new Cabinet and Housing Minister now in place, we're confident of seeing a further series of measures introduced to address the housing shortage, both locally and nationally".
If you’re interested in learning more about the support available for First Time Buyers, please do not hesitate to contact our Sales Team at Lovett Sales & Lettings, on either firstname.lastname@example.org or 01480 218200
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