Top housing boss warns it is the hardest time for first-time buyers since the 2008
The boss of Barratt Redrow has said it is the hardest time to be a first-time buyer since the financial crisis.
David Thomas, who has been the chief executive of Britain’s largest housebuilder for more than a decade, said that it was a ‘challenging, very, very difficult’ time for young people trying to get their foot on the property ladder.
Although he stopped short of calling it the ‘worst time ever’ to be a first-time buyer, he said the situation was ‘certainly’ nearing the bleakness seen just after the financial crisis in 2008.
He added: ‘Now that was probably more to do with lending, coming out of 2008/2009, but I think it is very, very comparable for first-time buyers, particularly when you look at areas like London and the south east.’
And he said the current ‘challenges around affordability’ are even harder for young people as there is now no Government support in place unlike in 2009.
Thomas said that the average age of a first-time buyer is ‘increasing and increasing’. The average age in England is now 34, according to the latest Skipton Group’s annual home affordability index published in March. It was 29 in the 1990s.
The number of first-time buyers has dropped over the past year as bosses blame student loan repayments for an affordability crunch
This was one of the factors contributing ‘towards generational inequalities,’ Thomas told the BBC.
Hefty student loan repayments mean it is harder for young people to get mortgages as ‘their available earnings as assessed by the bank for mortgage purposes will be lower,’ he said.
This means that ‘inevitably the pool of people that can afford [it] is reduced by that underlying debt position.’
Potential buyers are also facing a ‘really dramatic change’ in expectations for interest rates since the start of the year, Thomas said.
Hopes that interest rates would be cut this year have been dashed by rising inflation triggered by a spike in oil prices following the outbreak of war in the Middle East in late February.
This means that mortgage lenders have sharply increased the rates they are offering on fixed price deals.
‘If you are a first-time buyer, clearly that is a very dramatically different backdrop now, surrounded with a lot of uncertainty, Thomas said.
He added: ‘Unfortunately I think if you went back over the last five or six years, starting the year and being given a certain message and then finding out in the year that message has changed, has become more the norm.’
Data from property website Zoopla also revealed yesterday that there are 6 per cent fewer first-time buyers than there were a year ago.
And the average price they pay has increased by 4.3 per cent to £254,750 year-on-year in April, meaning they are borrowing more despite higher mortgage rates ratcheting up monthly payments.
Zoopla said higher prices paid by first-time buyers had contributed to a rise in house price growth, which increased from 1.4 per cent in March.
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