Twitter Facebook RSS FEEDS

100% of income required for property

Thursday, 10 July 2008 12:50 AM

First-time buyer couples on a low income now need to save 100 per cent of their joint earnings to enter the housing market, according to research from the Royal Institution of Chartered Surveyors (Rics).

According to the accessibility and affordability study released today by the organisation, those on lower quartile earnings (totalling £27,516 after taxes), now need to save their entire joint take home pay to build up the necessary funds.

In all first-time buyers need £27,738 for the up front buying costs on a typical home - including the deposit, fees and stamp duty.

This equates to a substantial rise from the low point of 21 per cent of income required in 1996, finds Rics.

The increase has largely been driven by lenders increasing the loan-to-value (LTV) ratio on products. As deposit levels have increase, thus would-be buyers are forced to save more.

"Access to the housing market has deteriorated as the credit crunch has taken hold of the mortgage lender sector," said Rics senior economist, David Stubbs.

"With mortgage approvals declining, the picture does not look like improving in the latter part of 2008 and first-time buyers will find their path to home ownership increasingly blocked."

However, for those with the funds available to secure a property, the picture is markedly rosier.

During the second quarter of 2008 a couple on lower quartile incomes had to spend 34.5 per cent of their combined take home pay on a mortgage - down from 37.2 per cent in the first quarter.

This is also significantly below the all time high of 46.5 per cent, recorded in the final quarter of 1989.

The improvement in affordability can be attributed to falling prices and tighter lending conditions, with smaller mortgages equating to smaller repayments in a time when interest rates are relatively low.

"Those who are able to access the housing market, will find that a bigger deposit will mean that mortgage repayments are reduced but with real incomes stagnating this will seem like light relief only," added Mr Stubbs.

"Homeowners' finances will continue to struggle with rising food and fuel costs making the burden of mortgage repayments even more difficult."

Chris O'Toole

Related stories

First-time buyers viewing a property

No deposit required for new 100 per cent mortgage

Could the first 100 per cent mortgage of recent times be a sign that the banks are suffering amnesia? Aldermore reckons not.

 Home owners planning to buy cheaper home in next five years could be underestimating equity they will release by £22,000 each. Image: Thinkstock

Downsizers warned to mind the £100 billion gap

Home owners planning to buy cheaper home in next five years could be underestimating equity they will release by £22,000 each.
Wimbledon tennis court

Declare your Wimbledon rental income, agents warn

Tax inspectors could be making unexpected visits to those renting out their homes during Wimbledon, Knight Frank has said.

 Abolition of stamp duty and reform of council tax tops list of recommendations from Mirrlees Review. Image: Thinkstock

Review calls for property tax shake-up

Abolition of stamp duty and reform of council tax tops list of recommendations from Mirrlees Review.

Row of terraced houses in London

Most Brits want to pass on property to their kids

Six out of ten say they want to bequeath their main home to their family but only four in ten are banking on an inheritance.

 Businessman carrying briefcase

Bankers not splashing bonuses on property

Despite receiving an estimated £14 billion in bonuses last year, few bankers are choosing to transfer this wealth into property.
Graduates throwing hats into air

Property values rise in new university towns

Property prices in towns where universities were established after 1960 have jumped from £91,612 to £155,953 in the last ten years.

 City of London

London second-most valuable place to have property

The English capital was also named the most expensive rental city in the world, with yields for landlords increasing 13 per cent.
Houses in Edinburgh

15% more tenants looking for rental property

Demand continues to outstrip supply despite an increase in the number of new properties coming to the rental market.

 Two men shaking hands by a property sold sign

Proportion of failed property transactions rises

The proportion of house sales that fall through has increased over the past three years. Find out why.

Search property

Headlines

Directory

Alaris

Alaris Logo
Alaris specialise in quality Bathrooms and Kitchens along with many other unique products for your home. The range of kitchens, kitchen worktops and bathrooms is extensive and the highest quality so you are sure to find what you want. New bathroom furniture, bathroom suites, taps, showers and cabinets are added regularly.

Bathrooms365

Bathrooms365 Logo
Bathroom365 supply all areas of your new bathroom - leading-edge designed bathroom suites, stylish bathroom taps and showers, all styles and forms of shower enclosures and a vast collection of bathroom furniture.

Beds Direct

Beds Direct Logo
Whether you've just moved into a property and need to furnish it or just fancy having something new to sleep on, Beds Direct offer you a wide array of beds to order online or via the telephone.

Fitmykitchen

Fitmykitchen Logo
Fitmykitchen are specialist suppliers of kitchen appliances, sink taps, waste bins and furniture. So whatever you want from kitchen sink taps to waste bins look no further than fitmykitchen, UK, the specialist suppliers of kitchen appliances, stainless steel sink taps, waste bins and kitchen furniture.

MyStampDuty

MyStampDuty Logo
We help people buying property all over the UK to minimise Stamp Duty Land Tax on residential and commercial property. If you are looking at purchasing a new home or business premises over £500,000, contact us today by completing the form on the right

Oak Furniture Land

Oak Furniture Land Logo
For hardwood furniture, including Solid Oak, Mango, Mahogany, Sheesham, Acacia, Ash and Birch, look no further than Oak Furniture Land.

Propertywide

Propertywide Logo
Propertywide.co.uk is Countrywide plc's dedicated property website. Created to provide online access to all our estate agency, lettings and property related services, Propertywide.co.uk has been designed with the consumer at heart.

The 21st Century Radiator Company

The 21st Century Radiator Company Logo
Welcome to 21st Century Radiator Company. We supply a stunning range of traditional reproduction high quality cast-iron radiators and cast-iron baths. All our cast-iron radiators and cast-iron baths are brand new, fully tested and guaranteed for ten years.

Rated People

Rated People Logo
Whatever type of home improvement or garden remodelling project you have, Rated People can help you to identify the right tradesmen for the job in a way that is quick, easy, convenient and, as it is based on real-life recommendations, trustworthy.

Residential Land

Residential Land Logo
If you are looking for short or long term rentals in Central London, Residential Land have a portfolio of over 1200 flats and houses in the best postcodes across the Capital.

Simply Bedrooms

Simply Bedrooms Logo
Simply Bedrooms, a part of Sleepwell Bedrooms Ltd, supplying quality beds, wardrobes, sliding door wardrobes and bedroom furniture at low prices and great service, London and Home Counties Specialists.

Door Handles UK

Door Handles UK Logo
Door Handles UK is the UK's largest online range of Door Handle accessories, Door Hinges, Locks and Latches and so much more and all at genuine internet prices. We have a wide range of Chrome, Brass and Glass Crystal Mortice door knobs in both traditional and contemporary designs, whatever your taste and budget you will find a design to suit.

Woodlands Furniture

Woodlands Furniture Logo
We are an established family business situated in rural Herefordshire specialising in beautiful handcrafted classic reproduction furniture. Our comprehensive ranges are readily available from stock.

Join our directory aboutproperty.co.uk

Twitter

Join the conversation at #aboutproperty

Directory articles

Why increasing amounts of people are opting for house shares

London is an expensive place to live, however, house shares offer you the opportunity to enjoy the hustle and bustle of the capital for a fraction of the price you would pay to live on your own, making them a cost-effective way forward.

Why sliding door wardrobes are the best choice for small spaces

When bedroom space is at a premium, you need to be creative with the furniture you invest in. In terms of the wardrobe, you may want to consider those with sliding doors, as they are the most practical in small bedrooms thanks to the doors.

The durability of mahogany furniture is ideal for the office

For office-based businesses it is vital to invest in high-quality furniture that is both practical and comfortable to use. While there are many products to choose from, the benefits on hand with items made from mahogany mean it is an option you should be certain to consider.