Living with parents - The pros and cons

Living with parents – The pros and cons

Due to high rents, lack of jobs and being priced out of the property market there is an increasing number of young adults moving back in with parents. Whether it’s to save for a deposit, due to unemployment or unable to afford high rent in comparison with wages, the number of 20s-30s moving back home is on the up.  

However there can be some advantages to this, usually low rent, sometimes includes meals and bills and the opportunity to save. If you get on well with your family then this is always a bonus. Although there are some people who consider this to be a horror story, not having their independence, family arguments and tensions and feeling guilty for coming home at early hours of the morning. This is a situation probably the majority of young adults today want to avoid but in a large amount of cases it is un-avoidable for a number of reasons.

With house prices increasing it seems first time buyers are becoming priced out of the market. Due to low wages in correlation with property prices it is difficult for first time buyers to initially stump up the money for a deposit and then qualify for the affordability of a mortgage.

The bank of mum and dad is increasingly known as donating deposits for their children’s first step on the property ladder. And in many situations with house prices increasing largely since the family home was purchased parents can often be sitting on a nice amount of equity in their own home.  

There are signs of things improving such as the Help to Buy scheme to assist people being able to get onto and move up the property ladder without the need for a large deposit.

Have you been in a similar situation? What was your experience? We look forward to hearing your opinions.

Rising house prices are increasing concern of affordability

Rising house prices are increasing concern of affordability.

Currently the biggest issue for first time buyers getting on the property ladder is affordability as house prices continue to rise and the amount required as a reasonable deposit increases. Nationwide found a property price increase of 8.8% over the course of 2013. Usually an increase in house price is welcomed as a positive thing, but not to the generation of young adults trying to get onto the property ladder. And because of this there is a whole new ‘Generation Boomerang’ of young adults having to live with their parents because they cannot afford a deposit or to rent.

House building is up on previous years but still not to the level required. Hand in hand the need for more housing, an increase in property prices and wages failing to keep up to pace with the housing market is showing increasing people priced out of the property market.

For example housing charity Shelter, measured house prices and wages as an average from 1997 – 2012 and found that the price of a home had increased from £75,762 to £253,816 and the average wage has increased from £16,500 to £25,932. If earnings had been raised at the same amount as house prices then the average salary would be £55,296.

Will we see a more affordable stable property market over the course of 2014? We will watch this space…

What does 2014 have in store for the Property Market?

What does 2014 have in store for the Property Market?

Finally in 2013 the UK’s property market has drastically picked up. Houses prices rose by 7.7 per cent throughout the country according to Halifax. The Help to Buy Scheme was launched to help first time buyers and existing homeowners move up the property ladder. Overall 2013 was a successful year for the UK’s property market and showed hopeful signs of revival.

The general prediction is the 2014 will show much of the same for the property market as 2013 did. With more confidence being injected into the property market it should continue to guide increasing house prices and transactions. With ever increasing need of properties it could be a year for making these changes and supplying the demand. Miles Shipside of Rightmove said, “We have experienced a 21 per cent year-on-year increase in traffic, with mortgage still historically cheap and interest rates set to remain stable if you’ve been putting off a good reason to up sticks, it could be opportune to make 2014 the year to move.” People are making use of the capital growth in London and moving towards the country suburbs and surrounding areas where they can afford larger properties and more for their money.

However with an increasing number of home owners there is worry on the horizon that interest rates on mortgages may rise, leaving many people with un-affordable mortgage repayments. Around 600,000 homeowners spend half of their income on mortgage payments, if interest rates were to rise this would leave more people less money for food and bills, this is something to be considered as the property market continues to improve.

 

Are you planning on moving this year? Let us know your thoughts on what 2014 will entail for the Property Market

UK housing market finally on the up!

UK housing market finally on the up!

Rate them or slate them, the new government schemes aimed at getting the property market moving again are proving to be working. The demand for housing is the highest since 2009, and the new government Help to Buy scheme is proving to be one of the reasons for this. After the Stamp Duty Holiday there was a lull in the property market for first time buyers, however now that mortgages with a higher loan to value and new government initiatives are more readily available the number of first time buyers is increasing.

Help to Buy Scheme

It is encouraging to see government schemes are having a positive effect on the property market. Help to Buy is aimed to enable people to purchase property with a small deposit (5%) and the government lending the further deposit (20%)  interest free for the first 5 years enabling the buyer to get a lower LTV mortgage (75%) with a lower interest rate and smaller monthly payments compared to if they took out a 95% LTV mortgage. Help to Buy is open to everyone, not just first time buyers; this may be why it is a factor in the rise of property demand. However developers need to be true to their word in delivering more housing so that house prices do not rise too drastically. According to a monthly report carried out by the RICS (Royal Institution of Charter Surveyors) property prices are starting to rise and inquiries from new buyers were at their highest since November 2009.

Funding for Lending Scheme

Another factor which may be responsible for the increase in the housing market is the Funding for Lending Scheme, introduced last August. It was aimed at making borrowing easier for prospective buyers, with mortgage lenders loosening strict mortgage requirements this has helped to reduce mortgage rates. The Funding for Lending scheme was designed to enable was designed to enable greater availability of funds to lenders at a lower cost and proves to be paying off. With lenders more confident in their credit supplies they are more openly providing borrowers with mortgages and supporting first time buyers. In conjunction with each other these schemes have had a positive effect on housing market activity and it is showing signs of further growth.

The Concerns

All this being said there are also some issues which may arise. House prices are gradually being pushed up, however this makes property which has been unaffordable even more unaffordable to buyers. Within our economy earnings are still showing very low signs of growth. With a demand for property and developers under pressure to deliver it is inevitable that property prices will rise.

The property market is still a favourable place to those looking to buy their first home. According to the Council for Mortgage Lenders more borrowers are taking out higher loan-to-value mortgages than any other time over the last four years. At first people were dubious about the success of these government schemes but from all the evidence they are only proving to be of help.