First-time buyers locked out of South of England

Mortgage Introducer

July 14, 2021

First-time buyers can not afford to buy in the South of England without access to additional deposit funds over 10%, the Q2 2021 Property & Homemovers Report from TwentyCi has revealed.

The average loan-to-income (LTI) value for properties in the South now stands at 5.78, driven up by Inner London which has a LTI value of 7.7.

Mortgage lenders are limited by the Financial Conduct Authority (FCA) on the number of mortgages they are allowed to issue at more than 4.5 LTI value which for many first-time buyers rules out the South. The North East of England and Scotland are currently the most affordable locations for first-time buyers both with a LTI value of 2.3.

The lack of affordability is further exacerbated by the acute lack of stock coming to the market. Aside from London, the whole of England and Wales at a regional level has between two and 1.7 months of property stock left to sell.

Overall, the available months of stock numbers are down by half on historical norms. The South West has the lowest level of houses for sale, whilst Inner London currently has the most.

The lack of stock is resulting in demand outstripping supply which is driving up house prices. The average asking price across the UK in Q2 2021 is now £391,000 compared to £361,000 in Q2 2019, an increase of 8.3%.

Wales and the North West have experienced the highest year-on-year price rises at 22% and 20% respectively. Inner London and Scotland at 3% and 10% have the lowest growth rates.

In comparison to Q2 2019 new instructions have fallen by 4%, whilst the number of sales agreed have risen by 33% and exchanges have increased by 18%.

The number of price changes is also significantly down (39%) as is the number of properties being withdrawn from the market (21%). With demand exceeding supply there is less requirement for discounting and less stock encourages buyers to remain in transition rather than look for an alternative.

Colin Bradshaw, chief customer officer at TwentyCi, said: “Getting on the property ladder has always been tricky, however, for people in the South of England it is now impossible without additional funds over and above an average mortgage and a 10% deposit. As we know the pandemic has changed the way people live their lives and as a result of this and a generous fiscal policy the property market is booming.

“However, with the stamp duty holiday coming to an end it remains to be seen whether there will be a significant increase in transactions falling through as a direct consequence of missing the incentive of the deadline.”

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