'Property prices are still unreachable for many,' says industry guru
Jamie Alexander (pictured), a mortgage broker at Alexander Southwell Mortgage Services, knows the UK property market’s challenges like the back of his hand. For her, recent shifts in this volatile market have shaped the experience of first-time buyers, presenting both hurdles and avenues of opportunity.
“For us, the first-time buyer market has been quite strong over the last year,” Alexander began. He credited this resilience to government initiatives aimed at helping new buyers step on to the property ladder. However, he was quick to acknowledge the glaring issues.
“Property prices are still unreachable for many,” he said. “They’re almost at their highest ever.”
The narrative is one of contrast. While wages have seen moderate increases, and lenders are offering more favourable income multiples, barriers remain substantial. Nationwide, for instance, now lends up to six times an individual’s income, a move Alexander describes as “huge” in many areas outside London. Yet, the capital remains a law unto itself, with house prices in “a different stratosphere completely,” he explained.
Help to Buy to kickstart the industry?
Even as lending opportunities broaden, Alexander highlighted the void left by the government’s decision to end the Help to Buy scheme.
“That really impacted when it hit,” he said. “If the government implemented Help to Buy for new builds or even second-hand homes, it would really kick-start the industry again.”
The surge in interest rates over the past few years has been another defining factor.
“There was a real big period when interest rates suddenly increased,” Alexander recalled, adding that they climbed to over 6% at one point. “Since then, they’ve drifted back to around 5%, and some better rates are at 4.5%. People are just accepting that this is the new normal now.”
On the rental front, skyrocketing prices compound the difficulties for those stuck outside homeownership. Alexander explained: “Rentals have increased significantly - some by 40% or 45%—so you have to ask, do you want to pay your landlord’s mortgage or your own?”
While renting might seem like a temporary fix, Alexander underscored that ownership offers long-term value, despite the burden of interest payments. “At the end of the day, you still have an asset for yourself,” he said.
‘It’s all about hitting those income multiples’
First-time buyers now account for approximately 70% of Alexander Southwell’s business. These buyers represent a diverse group, brought in through various channels, including online platforms and partnerships with estate agents. Alexander’s team remains busy handling a steady stream of applications, though he noted that home movers—a significant part of their client base—often require more effort and coordination.
When it comes to strategies, Alexander emphasized the importance of lenders adapting their products. “It’s all about hitting those income multiples,” he said. “If buyers don’t hit the right amount, it’s all a little irrelevant. But because lenders are now offering more money, they can afford the properties they want rather than settling for less.”
The buy-to-let sector has been one of the hardest hit by rising interest rates. “The people who it’s hit hardest are casual landlords,” Alexander noted, explaining that many have chosen to sell due to increased costs and diminished profitability. Professional landlords, however, remain largely unfazed, leveraging their resources to weather the storm. “They’ll adjust and adapt,” he said, but for many others, “it just doesn’t seem worth it at the moment.”
Geographically, Alexander’s client base spans from Southampton to Manchester, a reflection of both regional disparities in housing affordability and the reach of his brokerage. Despite this breadth, he observed no significant preference between new builds and second-hand properties among his clients.
As the market continues to shift, Alexander remains cautiously optimistic about future lending conditions. “It’s predicted that rates will slowly come down over the next 24 to 36 months,” he said, with hopes that some rates may dip into the 3% range. However, he dismissed the idea of a return to the ultra-low rates of recent memory.
“Anyone thinking rates will go back to 1% anytime soon, I can’t see it.”
For Alexander, the ultimate goal remains the same: guiding clients from the initial stages of buying a home to receiving their keys. In a market defined by unpredictability, he believes that offering comprehensive support is key.
“Rates are constantly changing,” he said, “and it’s about putting clients in the strongest position possible.”
