A recent BBC Panorama programme revealed a number of cases in which borrowers paid over-inflated prices for new build properties.
With this in mind, it is no surprise that buyers are somewhat sceptical of the housing market; an attitude that has not been helped by the doom mongering of the national press, highlighting only the minority of bad practices in the market, rather than the efforts the market and the regulator has made to eke out the bad apples.
With the government pledging to build an extra three million homes by 2020, caps must also be put in place to ensure that affordable housing is not snapped up by eager investors.
While the buy-to-let market should not shoulder the blame for the dwindling number of FTBs, it is fair to suggest that, typically, property investors have been looking at similar properties to that of aspiring first-timers. In an age where a greater number of people are choosing to rent as a result of fiscal or lifestyle choices, the demand for rental properties has escalated.
With a dip in confidence in stocks and shares, property has become a much more ‘sound’ investment for people looking for a generous return on their initial financial outlay.
Building further affordable housing could, in a worst case scenario, lead to more people becoming property investors and landlords, although the IKEA homes recently built in Gateshead includes the stipulation that these cannot be used for purely investment purposes and must be lived in by the buyer, rather than let.
A central theme
It is clear that despite the recent market turmoil, helping aspiring FTBs onto the property ladder is a central theme for Gordon Brown’s government and he has already made moves to improve affordable housing.
However, with cross-party conflict over what to accept and what to veto, there is a very real danger that any moves to improve the process for FTBs will be snuffed out before they get the opportunity to go ahead.
Indeed, a spokesperson for the CML urged the government to make considered choices that would benefit the market. “The growth of home ownership must be sustainable. To provide the widest choice of mortgages to customers – at the lowest cost – the government needs to simplify the range of schemes available. A number of policy conflicts must be resolved to achieve the desired outcome.”
It is clear that in today’s market the average FTB has a number of hurdles to negotiate. While Prime Minister Brown’s pledge to increase the rate of house building should be welcomed, the impact on any additional housing will be minimal, as the population continues to increase and costs escalate.
Both long, and short-term solutions are necessary if the sector wants to entice aspiring buyers into the market, and adding new homes to the mix is simply papering over the cracks that are becoming deeper year by year.
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