Tuesday, 12 May 2009

First time buyers can't wait out the crash.

Here is a chart illustrating a " compare and contrast" between prices paid by first-time buyers and house prices in general.

It points to a rather disturbing characteristic. The bubble hit first time buyers harder, with price appreciation for those starter homes being significantly higher than for the market as a whole.

More recently, prices for first-time buyers has stabilised, while for the market as a whole, prices continue to fall. Obviously, first-time buyers have lost their nerve, and decided to jump back in.

It could be a big mistake.

13 comments:

Candyman said...

If FTB's are looking for sympathy tell them it's in the dictionary somewhere betwenn sh*t & Syphillis!

mike said...

Nice graph, but should (in my opinion) be viewed in relation to the very low interest rates and the fact that some people can not live with their parents or friends any longer.

Once interest rates go up to 5%+ and we have the 3 million unemployed then I am sure this small blip will be over.

Mark Wadsworth said...

@ mike, you don't need to live with parents or friends, you can rent! We sold to rent in late 2007, and that's the end of that.

John McClane said...

My niece bought recently. I said don't, wait. But she wouldn't.

My brother almost did, on behalf of my nephew. I said, don't, wait. Shortly after, the price dropped through the floor.

Anonymous said...

The reason the lending market collapsed was due to the slim chance of loans being repaid.
If the FTBs are capable of repaying their loans and they make the mistake of piling into property too soon, there is no problem.
If on the other hand, the real problem facing the UK is a dramatic rise in unemployment, then enabling FTBs to make such a mistake just worsens the economic consequences.

electro-kevin said...
This comment has been removed by the author.
electro-kevin said...
This comment has been removed by the author.
electro-kevin said...

"If on the other hand, the real problem facing the UK is a dramatic rise in unemployment, then enabling FTBs to make such a mistake just worsens the economic consequences." Anon 22.20

A risk that Brown is prepared to take. A revival in confidence in the property market - in his mind - equals a revival in UK employment.

I see any sort of domestic construction/surveying/renovation/sales etc as no better for the economy than doing each other's laundry with imported soap.

Anonymous said...

I chose not to buy back into the market a few years ago. At the time anything I'd be happy to live in was way beyond my means. I've just bought a detached 3 bed at 35% below what it was sold for in 2005. I was classed as an FTB by all and sundry.

Was it me that skewed the figures for FTBs even though, IMO, I wasn't one?

Mark Wadsworth said...

@ John McLane, perhaps your niece thought you said "Don't wait!", rather than "Don't! Wait!"?

Chris said...

I suppose more first-time buyers would make all the difference... one would hope. Maybe a government scheme encouraging first-time buyers that actually works ;)

Anonymous said...

first time buyers are going to regret buying now as the falls we have left will wipe many of their deposits out..don't jump in too soon..i lost my house in the 80s and it hurt but will never buy in a market again until i know we are over the worst and we are no where near that yet...good luck all

Markbaldy said...

No where near the bottom yet.
Any upward blip will be short lived but may give Brown some support because people are daft, greedy morons and any price increases will make them feel wealthy again.
When prices go back to 3 times earnings from the 5.5 times we have now, then I may decide to jump back in...that's a 45% drop from where we are now.
It may take another 2 years to hit the bottom... by then unemployment will be way over 3 million (plus the 2.7 million conveniently branded under the "incapacity" heading... another New Labour manipulation of the truth !!!) and taxes as well as interest rates will have to rise... a perfect cocktail eh... massive, unemployment, high inflation, high interest rates, higher taxes... so where will the money come from to buy property at any price I wonder ?