The much used reference to the green shoots of recovery might actually seem appropriate when you consider that it is spring and also the UK property market appears to be growing stronger, leading to a greater level of optimism.
Five year high
According to the Council of Mortgage Lenders, the number of first time buyers who are currently active in the property market showed a 3% increase in February 2013. This represents the best start to a year since the financial crisis knocked the stuffing out of the property market in 2008. The CML is in a good position to gauge sentiment and activity as it represents some 97% of mortgage lenders and they were also talking positively by confirming that the data also confirmed that the first time buyer sector was 17% stronger this February than it was at the same time last year.
Room for improvement
Most property professionals agree that the key to improving market conditions overall is increased activity from first time buyers as they provide the much needed stimulus and are often the catalyst that allows trading further up the ladder. There is however considerable room for improvement yet in property trading conditions overall as lending overall saw a dip in the same period and remortgaging was also down.
Number crunching
The raw data that supports the general cause for greater optimism shows that a total of 16,400 loans were advanced to first time buyers in February 2013 compared to 15,900 in January and beating the 14,000 total for the same time last year. Loans to first time buyers totalled £2billion and that is 18% higher than the figure for February 2012.
The most positive aspect of the figures released and the area that will give due cause for a greater sense of optimism, is the fact that lending to first time buyers accounted for 43% of all mortgage lending in the month of February, which is the sixth consecutive month that these prized newbie purchasers have accounted for more than 40% of lending activity.
Affordability levels improving
The fact that affordability levels are improving all the time gives more than an element of hope that the property market will continue to demonstrate those much needed green shoots throughout the rest of 2013.First time buyers are now generally buying less expensive properties and are also typically borrowing smaller amounts to fund their house purchase but the average deposit remains steady at a typical 20% of the purchase price. A dose of austerity driven caution when first time buyers are making their purchasing decisions can surely be viewed as a more solid foundation for sustained growth in the property market by offering a lower risk of prices overheating, and of course the Funding for Lending Scheme has played a part too in enticing new buyers to take that all important first step on the property ladder.
A boost to the UK economy
A resurgent property market is likely to be a key contributing factor in keeping the UK economy on the road to a fuller recovery over the next few years and increased activity for first time buyers together with a number of Government backed initiatives as well, will be a key factor in providing growth and restoring consumer confidence.
That is quite a bit of pressure to put upon young people taking their first step onto the world of property ownership, but on the evidence of the latest figures, they appear to be up for the challenge.
John Darling ran his own construction company before retiring. Now he is an avid blogger that enjoys sharing his industry insights. To learn more about managing or running construction companies, visit the link.
