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Average mortgage costs to income for first time buyers are now higher than they were in the 1990s at the peak of the last housing boom, while increasing numbers of households are moving into private rented housing, according to the newly published UK Housing Review…

First time buyers were devoting nearly 35% of their income to mortgage costs by the third quarter of 2007, compared with the previous high of nearly 34% in 1990. The sharp rise in house prices and mortgage costs over the last decade contrasts with the pattern of private rents, which have merely kept pace with earnings, resulting in substantially lower rents than mortgage costs (around 64% of the cost) on equivalent properties.

The Review, published by the Chartered Institute of Housing (CIH) and the Building Societies Association (BSA), attributes the rapid growth in the private rented sector to the relative competitiveness of private renting as opposed to owner-occupation and the greater choice available to households seeking such housing.

Steve Wilcox, Professor of Housing Policy at the University of York, and author of the Review:

“Private renting has become far more competitive as an option for households compared to the cost of buying; the sector has grown by 21% in the last five years across the UK and is fulfilling a significant role in the housing market. With the rates of population and household growth outstripping current and planned new house building we are likely to see continuing growth of the private rented sector.”

Adrian Coles, Director-General of the Building Societies Association, commented:

“With first time buyers finding it increasingly difficult to get a foot on the housing ladder, the private rented sector is providing good quality accommodation to increasing numbers of people. Through the provision of loans to landlords, building societies are helping to ensure the success of the private rental sector. Even with present market conditions it is still possible for both astute landlords and lenders to serve this sector successfully.

“However, building societies have not forgotten the first time buyer, and the recent BSA report ‘Stepping up to the Mark’ demonstrated the wide range of innovative products that societies have developed for this market.”

Posted under First Time Buyers, News

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