In fact the RICS report revealed that getting onto the housing ladder is harder now then at any time since 1990. Housing affordability is near a record low and what’s more, the RICS can’t see the situation improving for a number of decades.
On the back of this report Yvette Cooper, housing minister, could be heard reinforcing the need for house-builders and local councils to get with the program and meet central governments plans to create 2 million more homes by 2016.
Now that’s all very well but if you’ve ever had reason to dance with your local planning authority, you’ll know that there is a mountain of bureaucratic red tape and local government inefficiency issues that need to be addressed before any major increase in the UK’s housing stock can be achieved.
I can’t personally see the problems with our Planning System being overcome anytime soon and with the problems in the US sub-prime mortgage market set to increase the cost of borrowing money in the UK, I can’t see how the Government is going to be able to help the lot of first time buyers in the short term.
So just how bad is the situation for first time buyers? Well the RICS report found that an average couple (with earnings in the lowest quarter) has to spend 44% of their combined take-home pay on maintaining their mortgage re-payments.
That figure is up 6% from March 2007 and is only 4% away from being at its highest point in history. If you’re interested, the peak of the last housing boom was in the first quarter of 1990 and just before the crash, the average homeowner had to use 48% of their take-home pay to service their mortgage – ouch!
There is a counter theory posed by David Stubbs (Chief economist for the RICS) that may signal the way for an improvement in the lot of the UK’s first time buyers. He comments that “with house price growth expected to be below earnings growth in 2008, and with possible interest rate cuts in the second half of that year, the burden on first time buyers may lessen somewhat”.
Estate Agents Advice on Avoiding HIPs
Monday the 10th of September saw the start of 3-bedroom properties having to adhere to the provision of Home Information Packs.
What’s interesting is the reaction of estate agents. Hotproperty.co.uk (which is one of the UK’s up and coming property portals) has canvassed the 223 estate agents that advertise with them and found that 59% are planning on advising their clients to “reclassify” their homes in order to avoid having to provide a HIP.
If you’re about to sell a 3-bedroom property don’t be surprised if your agent suggest that in fact your property only has 2 bedrooms and a very lovely home study.
I would urge you to think carefully before agreeing to this marketing tactic. Over 90% of buyers start their search online. If buyers are looking on Rightmove say for 3 bedroom houses but your house will only show up if someone searches for 2-bedroom houses, you may find your target buyers miss your property altogether!
What’s more, as HIP’s become a fact of life, buyers will start to become suspicious of properties that don’t have one. When you consider that a HiP should not cost you more than £300-£400 it seems hardly worth your while taking such a big risk with your sale.