Whilst Nationwide report that house prices would move modestly over the next 12 months, Capital Economics on the other hand, expects the housing crisis to end in 2012.
Nationwide has found that House prices in Britain fell by 1% in March, mainly due to the end of the stamp duty holiday. Whilst getting on the property ladder is harder than ever for first time buyers, with wages having been frozen coupled with the high cost of living, making life hard for those saving for a deposit for their first home.
The House Price Index for March has been released by Nationwide Building Society and revealed the average price of a home in Britain fell by 1% compared to February, making this the biggest house price fall since 2010. The typical home now costs in excess of £163,000.
The good news was that the stamp duty holiday has helped many first time buyers to get on the property ladder, who have enjoyed a concession of up to £2,500 in Stamp duty tax. An estimated 180,000 first time buyers secured a property prior to the end of the stamp duty holiday.
Whilst Nationwide report that house prices would move modestly over the next 12 months, Capital Economics on the other hand, expects the housing crisis to end in 2012 due to the Banks beginning to loosen credit. Even though the average credit score required to attain a mortgage has been consistent, indications show that there is a loosening of credit availability.
It's all in the LTV, or, Loan to value ratio. At the height of the crisis the banks would only lend an average of 74% of a properties value, now this has gone up to an average of 82%. Capital Economics states this is the clearest sign yet of an improvement in mortgage credit conditions. Banks seem to be a little more flexible, offering lending amounts of up to 3.5 times earnings, rather than the average of 3.2 during the crisis.
Whilst the picture is certainly looking rosier for first time buyers, and an obvious loosening of credit conditions, first time buyers are still struggling with credit requirements. For example, at an 82% loan to value ratio, on the average £163,000 property, you would need a deposit of £29,340 and a wage of £38,188 at 3.5 times earnings ratio to be able to afford the average house.
Whilst conditions have improved, is it enough to entice first time buyers to the market and see actual house price gains? We don't think so, yet. But the movements are definitely in a positive direction.
**This article is correct at the time of writing, please do not take our example above as gospel, and ensure you speak to your own mortgage advisor regarding your mortgage options. Whilst the average national price of a property is £163,000, there are many houses for sale in Leeds well below that amount. We've seen hundreds of properties in Leeds for sale under £100,000.
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