Market Watch

Name: Andrew Montlake
Company: Coreco Group

It is hard not to feel sorry for first-time buyers. For years, they have believed that owning a home as early as possible is an essential statement to the rest of society. Now there seems to be a worrying, yet intriguing sea-change from the political corridors of power that to control the economy effectively, the housing market must be tamed.

This means not only keeping prices in check, but also a change in the view that buying your own property early is the correct thing to do. If more people rented initially, and then bought property much later in life, the market may not be so dynamic.

Against this backdrop, we are seeing a definite rise in first-time buyer activity, buoyed on by low property prices and low mortgage rates, but stifled by tough lending criteria and high deposit requirements. As things stand currently, Q1 2010 will be crucial to see whether the corner has been turned and whether activity will continue to grow.

On the negative side, there are worries about job security and the economy as a whole, and with the prospect of a general election looming, lenders and borrowers may adopt a cautious approach. On the other hand, we have already seen a vast improvement from a few months ago and the recovery in lending terms will continue even if prices begin to fall again.

The Government and regulatory bodies will help or hinder this process as they see fit, whether by way of Stamp Duty reforms or regulations restricting the type of lending that can be done.


Name: Fahim Antoniades
Company: Mortgage Centre IFA

It is encouraging to hear that first-time buyer numbers are increasing, although we should remember that these figures are part of an overall increase in lending across the whole buying spectrum.

Therefore, the key analysis would be to compare what percentage of overall lending was driven by first-time buyers in pre-credit crunch times compared to the latest figures. I suspect that in this regard, these figures will probably paint a grimmer picture than the rest of the market.

By now, we will all be familiar with the restrictions on first-time buyer access, which are the lack of available stock, job insecurity and the large deposits required.

Nevertheless, we can be hopeful that the first-time buyer market is starting to turn a corner. Stock is becoming more available as sellers loosen their stubborn grip on asking prices, which, in my opinion, is the largest contributing factor to the increase in sales.

Although job insecurity is still a concern, there is a sense that people are starting to acclimatise and move on.

Far and away the largest contributing factor to the return of first-time buyers is the availability of credit. More 90% deals at lower rates – the lifeblood for the first-time buyer – are required.

However, there may be a new contributing factor as a direct result of the crisis. This is the social change which has many embittered would-be buyers wondering if they really have to own a home.

After all, the UK has the largest proportion of homeowners in the developed economies. Elsewhere it is perfectly acceptable to rent.


Name: Gary Lederberg  
Company: Affirmative Finance

The future for first-time buyers currently looks increasingly harder and not that much better at all.

I also believe that the CML’s figures do not reflect what I would call a true first-time buyer. They are reflecting buyers who are not standing on their own two feet. Indeed, these people have no option but to turn to others to assist financially.

If there are no others available, then purchasing a property for the first time becomes nothing but a pipe dream – or a dream than can only be fulfilled much later in life.

The modern day first-time buyer is now supported by parents or grandparents who use savings or equity in their own homes to help with the very large deposits needed in the criteria-led world which we live in today.

The support of relatives will be exhausted, one would think, at some point in time. This begs the question of what will happen then?

Frankly, I am not completely sure, and neither are the people who are far more sophisticated than I am, whose articles we read everyday in the newspapers and on the internet. Everyday there seems to be some sort of twist and turn.

However, we live in hope that at some point in the not too distant future, we can achieve some form of true stabilisation of property prices, which will mean that lending institutions can lend with a degree of certainty of asset value. This will allow better and more structured products to be provided for first-time buyers and to the rest of us.