The First Time Buyers Conundrum
So we are all agreed that to have a thriving housing market we need to be able to provide a constant flow of lower cost properties for first time buyers, allowing them to get onto the housing ladder.
The problem is, and to a certain extent always has been that those properties have a habit of gaining value. They keep doing that to the point that they become unaffordable for first time buyers, closing down the flow within the market of buyers moving up the ladder to more expensive homes.
One of the issues is that these starter homes need to increase in value in order for the owner to be able to afford to move, but by doing so they also become less affordable by the next generation of would be home owners.
This means that we either need a constant new supply of under valued or subsidised first time buyers homes or we need to to control the rise in their value or we need to create a different financing system for first time buyers, with maybe 50 year terms being the norm to spread the cost of buying the home & creating affordable repayments.
The lack of new buyers able to move onto the housing ladder impacts the rest of the housing market, because those home owners wanting to move up the ladder struggle to find buyers and therefore can’t progress towards their dream home.
Without their dream home, they are less likely to invest in home improvements, conservatories, double glazing, solar panels, window shutters, flooring, kitchens, fitter bedrooms etc.
These are huge markets in the UK and need a steady progression up the housing ladder to provide new customers for their businesses.
Window shutters are one home improvement product that is very popular at present, offering a great look, while offering privacy, security and also light control through adjustable louvres.
The housing market has continued to gain value unlike the average wage in the UK which has stagnated since the financial crash of 2008.
This difference has created a growing gap in affordability that can only be closed by intervention in one way or another.
As long as we build too few houses for a growing population we will artificially be supporting unrealistic house valuations that are increasingly unsustainable in the long term.