Homes ‘To Break One Million Pound Barrier By 2024′
The cost of the average property purchased by a first-time buyer could be set to break the £1 million barrier within the space of several years, it has been suggested.
According to Stroud & Swindon, the typical home bought by those looking to make their initial steps on the housing ladder could be worth a seven-figure sum in just 17 years’ time. However, if property prices continue to rise at their current rate of growth, the building society claimed that those areas of the country which are currently experiencing higher than average prices could surpass this mark even sooner.
The firm reported that if the sector persists in its robustness, then the houses in the Greater London region will be worth £1 million by 2018, with the south-east and south-west following suit by 2022 and 2023 respectively. Outside of England, Northern Ireland is also predicted to have reached this figure by 2018. Although this was not forecast to have happened until 2025, the marked house price growth the principality has seen over the last 12 months has caused the financial service firm to bring this forward by seven years. Recent rises in the value of property have also seen projections for homes in Scotland and Wales to be pushed ahead by four and three years each to 2035 and 2029 respectively.
In the future, first-time buyers could consequently have to take out a loan worth seven times their average income - which is predicted to stand at £136,074 by 2024. As a result, Stroud & Swindon reported that this could see many potential buyers either put off “life goals” such as getting married or having children in a bid to save up money or refrain from purchasing their own home altogether. Meanwhile, credit providers have been urged to ensure they issue secured loans for property purchase in a sensible manner.
Commenting on the study, Paul Chafer, sales director for the financial services firm, said: “Mortgage providers also need to consider their lending criteria and actively work to develop products that help first-time buyers to get on to the property ladder in a responsible and sustainable manner. It is pointless simply increasing income multiples if this is going to result in consumers taking on levels of debt they cannot service.”
Adding that such predictions paint a “worrying picture”, the director reported that consumers are to struggle even more to afford property, despite recent statistics showing a slowing in growth. Although he pointed out that many young people “assume” they will be able to purchase a home in the future, they may find this much more difficult than originally thought. “Therefore, it is vitally important for both potential first-time buyers and their parents to start putting money aside for a house deposit as soon as possible,” Mr Chafer claimed.
Those who find they get behind with meeting monthly mortgage repayments due to the ever-rising cost of property may wish to take out a bad credit loan. Earlier this year, Simon Beames, mortgage adviser for the Independent Mortgage Advice Bureau, claimed that sub-prime lenders should provide borrowers with greater flexibility to make repayments and offer more advice to those struggling to manage their debts.
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