First-time Buyers in Britain Falls to Record Low in 2011

Despite house prices declining to their most affordable levels in eight years, mortgage lender Halifax said in a survey on Monday that the number of First-time buyers in Britain has fallen to a record low in 2011.

Halifax estimated there were around 187’000 first-time home buyers in 2011 which is down 7 percent from 2010 which represents the lowest annual total since its records began in 1974.

London Property Prices Bucking the National Trend

Research conducted by Hometrack showed the property market was kept from a steep decline in 2011 due to overseas buyers. They found that house prices fell in almost 80% of areas across England and Wales with an overall decline of 2.1%. However, London managed to buck the trend where the priciest areas rose by nearly 5%. London’s house prices rose by 1% due to the demand for properties in areas like Mayfair and the Knightbridge.

“The strength of the London market, where prices are up 1% and by more than 5% in central London, has flattered the national picture.” said Richard Donnell, director of research at Hometrack. He also went on to say the “Strong international and domestic demand saw prices in the more affluent parts of the capital rise over 2011.”

Mortgage Guarantee Scheme

Last month, Chancellor George Osborne announced plans to help out Britons struggling to get onto the property ladder, with the housing market hit by the country’s economic slowdown.

Osborne said the government would be providing a mortgage guarantee scheme to help struggling first-time buyers put down deposits for property loans.

With many banks have tightening up their mortgage lending criteria after the 2007-2008 credit crisis, which resulted in part due to loans being made to poorer home owners in the United States began to default as a result of not being able to afford the repayments.

Britain has also proposed stricter mortgage lending rules to help prevent a recurrence of irresponsible lending practices that led to the banking crisis.

The Financial Services Authority regulator this month outlined proposals for more thorough checks on mortgage applications. The industry was blighted by so-called “liar loans” – this is where a borrower was able to obtain a self-certified mortgage without giving any proof of income.