The number of first-time homebuyers in the United Kingdom fell to the lowest level in almost two decades, as tighter lending conditions in the country curbed the people’s ability to purchase property, said GfK NOP.
According to London-based GfK, about 347,000 first-time homebuyers took out a home loan in the year through February, less than half the peak of over 700,000 recorded home loans between 2004 and 2005. This was the lowest number since the survey started in 1992.
Several banks have tightened credit, as they try to rebuild their balance sheets after the financial crisis dragged the country into the deepest recession on record. To help first-time buyers, the UK government scrapped a tax on house purchases for those who spend less than 250,000 pounds or US$384,000. However, GfK said the move may not help such buyers, as many of them do not have the 25 percent deposit that many lenders require.
“Increased prudence on the part of lenders has priced many out of the housing market,” said Ben Steer, financial director of GfK. “The challenge for these financial providers is to create products which will assist young people, without creating the conditions that sparked the crisis in the first place.”
Insufficient supply of homes in the country is pushing up property prices again, after property values slumped by about a fifth from its 2007 peak. Home sellers increased their asking prices by the largest amount for April in three years, said property web site Rightmove Plc. The average home price in England and Wales jumped 2.6 percent to 235,512 pounds.