Property ladder gymnastics in 2016

Published February 2nd, 2016

Getting your foot on the property ladder has long been recommended as the soundest investment that you can make in the UK. Residential property values are recovering from the 2008 crisis and many predict a 50 per cent increase over the next 10 years; the average house price could climb to £420,000. No wonder that today’s “Generation Rent” of first time buyers (ftb) consider that they need to be gymnasts in order to reach even the bottom rung of the property ladder.

The average price paid for a house by a ftb in England and Wales in October 2015 was £218,000 (source; Office for National Statistics) and yet the average salary of a person aged 25 is £22,700 (source; HMRC 2013).  The average deposit paid by a ftb is believed to be 17 per cent, meaning that this same 25 year old has to warm up for their gymnastic leap to the first rung of the property ladder by ‘finding’ a staggering £37,000. Following the Mortgage Market Review, lenders now conduct a more detailed affordability assessment to decide how much they will lend as well as restrictions on income multiples of around 4.5 x salary; in this scenario, requiring a ftb salary of at least £40,000.

Help to Buy

Help to Buy

The Government’s Help to Buy Scheme (extended to 2021) was set up to allow ftbs the opportunity to buy a house with only five per cent deposit and this is now offered by most high street banks and developers of new homes.  In fact, some developers have in the past thrown in free legal costs, furnishings and even white goods.

At first glance, this sounds wonderful, however, there is a chronic shortage of housing and very often the ftb competes with investors acquiring houses suitable for the growing rental market.  From April 2016 an extra three per cent stamp duty will be levied on buy to let landlords and second home owners and this may create a rush on remaining housing stock.

The Government’s wish is that one million homes are built by 2020 but this seems optimistic in view of the lack of building land with planning permission, skilled labour and building materials. The National Association of Estate Agents claims that ‘a drastic and immediate policy overhaul is necessary to fix Britain’s broken property market’.

Many 25-year-old potential ftb ‘gymnasts’ will just have to remain living with their parents while saving money in Help to Buy ISA’s and cross their fingers that in 2016 the Government takes action to solve the acute problems facing the UK housing market.

Berrys has an active waiting list of buyers looking for the right house in Shropshire – maybe your house will suit them.  If you are looking to move home and would like a no-obligation consultation, then contact Philip Robinson, Residential Agency Manager at the Shrewsbury office of Berrys on 01743 239021 or email

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