Rise in First Time Buyers sends House Prices Surging
The United Kingdom real estate market was not short of positive growth and trends. Housebuilders such as Barratt Developments saw up to a 70% increase, sellers saw a sharp rise an annual housing prices, but perhaps the most significant boost was with first time buyers. First time buyers grew by more than one-fifth with more 265,000 first-time buyers, the largest increase in over a decade. First time buyers accounted for 44% of all mortgages in 2013, up by more than 4% from 2012. These positive trends indicate that the government schemes and confidence in the real estate market have has been effective for the economic recovery but are growing concerns of another bubble founded or does the government have it under control?
Has Help to Buy Increased House Sales
The dramatic increase in first time buyers is a result of the government mortgage schemes such as Help to buy, which gives first time home buyers the option of a 5% deposit and this helps sellers with achieving a buyer for their house. The low deposit and low interest rates offer incentive for buyers who are seeking a spot on the real estate ladder. The Barratt Development sold over 6000 properties in 2013, that’s significantly more than the thousand that they sold during 2012 and Barratt Development has reported that more than 25% of sales were to individuals taking advantage of Help to Buy. In response to the increasing demand builders have put on the safety hats and got to work and construction is now at it’s highest since 2007, but many economist and real estate experts believe the market is not balanced and a bubble in vastly growing in size and sensitivity.
A lack of Housing is Causing Prices to Rise
The deficient supply of homes and increased demand has caused a rapid surge of property prices in U.K. The U.K. saw an 8% increase in housing prices in 2013 and with a projected 9% increase in 2014, fears are increasing that the prices are at risk of another crisis. Furthermore, experts worry first time buyers might not be living within their means when housing prices and interest rates create higher mortgage payments. Halifax has found that less than 30% of towns in the U.K. have affordable homes for first time buyers as housing prices are more than four times that of an average income.
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