Tenants optimistic despite rising costs of housing

The latest report from Your Move has indicated that tenants remain optimistic, despite rises in housing costs, mortgage and deposit fees.

In January, a number of tenants were asked when they planned to buy their first home. 15% said that they were confident of doing this within the next year. This was a rise from the 6% who were equally as confident in September 2015.

Homeownership dream

Additionally, the number of renters who said that they would never realistically be able to make it onto the property ladder was 10%, down from 12% in September and 13% in February 2015. Those in rental accommodation who want to own a property remains very high, with 94% of tenants dreaming of their own home.

This optimism towards home-ownership goes against the soaring costs attributed to owning a property. The average first-time buyer deposit was £28,393 in January, a rise of 6.3% year-on-year and the highest since August 2013. In turn, this has impacted on the number of initial buyer income taken up by deposit costs. In January 2015, a property deposit accounted for 70.3% of first-time buyer income. By January 2016, that figure had increased to 72.2%, the greatest since December 2013.

Similarly, the LTV rate is starting to decline, with January’s total of 82.9% showing a 0.5% monthly fall. This means that first-time buyers will be able to borrow less against the value of their desired home. As a result, they will be forced to pay more upfront. However, the absolute number of higher LTV loans increased in January by 7.3% in the month, according to the Mortgage Monitor from e.surv.

Tenants optimistic despite rising costs of housing

Fearless

Adrian Gill, director of estate agents Your Move and Reeds Rains, noted, ‘first-time buyers are moving from weariness to fearlessness. They are long-used to the housing market being a sellers’ arena and have come to expect daunting deposit costs and prohibitive property prices.’ He went on to say however, ‘the desire among first-time buyers to own their own home is outweighing those considerations as they resolve to get on the property ladder sooner rather than later-be that through saving money or compromising on their property specifications.’[1]

‘Moreover, despite the gloomy headline figures, there are still enough positive fundamentals in the property market to make taking the plunge a worthwhile investment. High LTV loans are plentiful , the average mortgage rate is still at rock-bottom levels-bolstered by the Bank Of England’s refusal to contemplate raising rates anytime soon-and the economic outlooks remains mostly sunny. Indeed, first-time buyers getting on the ladder now are demonstrating cunning as well as courage-they understand that, while the homeownership costs may not be ideal, conditions could be worse. After months of turbulent fortunes, they’ve come to know better than to look a gift horse in the mouth,’ Gill concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/tenants-remain-optimistic-in-the-face-of-rising-home-ownership-costs.html