Daily Express – Tuesday 18 July 2006, Cont'd

Remortgaging

Russell Jervis, Managing Director of Hear Estate Agents, said: “This projected growth is good news for homeowners, but the buyers who are not yet on the property ladder will suffer as average house prices move even further out of their reach. “

“The long term stability of the housing market cannot be sustained without first time buyers.  We can expect to see parents remortgaging to give their kids a deposit to buy their homes. “

Andy Wiggans, Director of Mortgage Products at Bradford & Bingley, said: “Rising house prices are certainly good news for homeowners.  However, banks and building societies will have to become increasingly innovative in their product development to help first time buyers. “

“We will see more mortgages with longer repayment terms and flexible criteria”.

Accordingly to analysis by Oxford Economic Forecasting, there is enough spare capacity in the economy to allow growth to continue without triggering the mortgage rate rises which would put a damper on the property market.

Earnings are expected to grow between 4.1% and 4.4% a year over the period but house prices will rise more quickly, with increases averaging 7% a year after 2008.

The report noted that just 154,870 new homes were built last year despite government’s own projections saying an average of 209,000 new homes a year are needed to satisfy demand over the next 20 years.

Nicholas Leeming, Director of Property Website propertyfinder.com, said:- The same government that predicts Britain’s need of 200,000 plus new homes a year is also responsible for the chaos in planning regulations that prevents them being built.

Support

“We need more family homes and fewer flats.  Without adequate new supply, prices will inevitably march upwards”.

The Oxford report showed that first time buyers now account for less than 30% of home purchases in 2005, compared with 50% in 1995. 

Mr Orr said: “Young working couples, key workers and people on low incomes have little chance of fulfilling their home ownership dream without financial support from parents or the state.”

“This can have serious social consequences for the birth rate, for keeping essential public workers in high housing costs areas, for government expenditure and for the UK’s business competitiveness.”

The OEF concluded that, with short supply and high levels of consumer confidence, there would be nothing to stop the average house price climbing above £300,000.

Average house prices have risen by 139% since Labour came to power in 1997, but earnings have risen by just 24%.

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