What is in store for UK’s first time buyers in 2008

Posted under General by Michael

Buying a property is one of the biggest decisions in one’s life. It is the time when one decides to invest his hard earned money or thinks of raising finances for owning a property.
Many people confront problem of raising finances. They need to plan how to arrange for monthly repayments and even paying off capital. Buying is always more expensive and difficult than renting, but it makes you the owner of your own place.

Timing your decision to buy property is very important, but equally difficult. Finding best price for a property is a difficult proposition. There is a boom in the property prices in the past 10 years. According to Halifax Building Society average price of £70,000 in 1997 has gone up to £197,000 in 2007. The increase is almost 182%.

Rocketing property prices had an adverse impact in 2007. The number of first time buyers dropped to 300,000 in 2007, the lowest since 1980 and less by 15,000 than in 2006. It was also reported that 96% of the first time buyers in UK, could not afford such high prices.

But the picture is rosy for 2008. Property market witnessed a big crash in the house prices in the last quarter of 2007.David Kuo of the Motely Fool financial website is predicting a fall of 20% in the house prices during the year. Another prediction, favourable to the first time buyers is that base interest rates of Bank of England will also be falling to stimulate growth in economy. The first time buyers will be reaping dual advantage.

Martin Ellis, chief economist at the Halifax, feels that current state of UK economy is sound; hence the house prices will remain flat during 2008.

Though price front may not bother the first time buyers, getting their mortgage approved will be more difficult in 2008. Lending approvals were down by 40% in November 2007. The situation may improve if interest rate cuts take place as predicted. Overall climate seems favourable to the first time buyers.

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