 Only falling house prices failed to prevent first time buyer numbers slumping to an all-time low this year despite home ownership becoming more affordable than it has been for eight years. Fewer than four years’ average earnings are now needed to buy the typical first-time buyer property in just under half of local authority districts, according to new figures released by the Halifax. This compares with just 5 per cent that were reckoned to be affordable on the same basis before the credit crisis began in 2007. Halifax says the main reason for the decline is the need to put down a bigger deposit; the average first- time buyer deposit in 2011 was £27,000 compared to £17,500 four years ago. The deposit now stands at around 20 per cent of the purchase price. Overall, there were only 187,000 first-time buyers in 2011: the lowest annual total since records began in 1974 and less than half the peak of 402,800 first-time buyers in 2006. It is obvious that rising unemployment, lack of confidence in the economy and student debt are all factors in this decline, but the trend is nonetheless worrying. And the future hardly looks rosy for those young people wishing to buy their home in 2012; the Stamp Duty threshold will be halved to £125,000 adding more to the cost of buying property and almost wiping out the benefit of the Government’s shared equity schemes. It is also worrying that the few who did manage to get on the property ladder in 2011 were likely to have had support from well-off parents. In the third quarter of this year, 64 per cent of first-time buyers bought with the help of parents or relatives, compared to less than half that five years ago. The Halifax survey details the national trend but here in the South West the housing crisis is sharply relevant to young people. The combined effects of a low-wage economy, the proliferation of second homes and the shortage of affordable homes in the region create for many an insurmountable situation. The Halifax forecast for 2012 is that house prices would stagnate, moving in a band of plus or minus 2 per cent over the year, so there is little relief here. There is no doubt that the Westcountry’s three universities and the numerous colleges are now producing high-quality graduates who are key to growth and the advancement of enterprise in the local economy. But if they cannot find homes they are likely to be drawn to other regions of the UK where their prospects are better, thus creating an unsustainable position of the region training and educating potential economic leaders only to lose them to UK competitors. This exodus would be harmful to the prospect of growth in the South West. Current initiatives to resolve the housing crisis are worthy but piecemeal and mostly address only the symptoms and not the cause. Could 2012 be the year when all of the authorities unite to resolve this once and for all? |