First-time house buyers warned climbing property ladder in 2016 will be a ‘harder challenge’
- Credit: Archant
House prices in East Anglia are set to rise by 8% next year – the highest in the country, according to a new forecast.
First-time buyers were last night warned to prepare for a “harder challenge” in climbing on to the property ladder in 2016 as property values continue to soar and outstrip stagnant wages.
Property experts also raised concerns over a lack of housing stock in the region and blamed a “culture change” for homeowners putting their properties on the market far less frequently.
The Royal Institute of Chartered Surveyors (RICS), which issued the prediction, said the national house price increase next year will be 6%, including 5% in London and 7% in the South East and West Midlands.
According to property website Zoopla, the current average house price in Suffolk is £264,463. If values rise by 8%, the new average this time next year will be £285,620.
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In Essex, the current average of £329,366 will increase to £355,715.
Emmerson Dutton, partner at Bedfords Estate Agents, which has offices across Suffolk, said: “First-time buyers are struggling as it is and the predicted figure is not going to help, although it shows confidence in the county.
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“It will further distance the first-time buyer from buying any time soon. They are going to have to save and save and save, and unless drastic action happens, I don’t know what can be done.
“(A lack of supply) has really been a problem. Every estate agent in the county is desperate for stock and we are not expecting stockpiles to increase next year. We think it is probably going to go the other way.
“All agents are fighting over what little stock there is and, in a way, that competition to get the job may lead to less-experienced (agents) to overvalue and that’s where a false market could be created.
“Everyone is pleased there is a willingness from a buyer and a seller, it is purely stock levels, and first-time buyers are going to be further distanced from the ladder. Simple as that. That first step is going to be slightly further up, and there is little being done.
“Wealth that is coming into the market is pushing prices and that is not going to change. We can’t stop people coming to Suffolk to live in a nice place.”
It comes after research last month found the average worker would have to more than double their current salary – an increase of £26,000 in Suffolk and £32,000 in Essex – to afford a typical mortgage.
Harry Wass, valuer for estate agents Flick & Son in Aldeburgh, said property prices in the Suffolk coast area have increased by between 8% and 10% this year.
He said: “In the 1980s, people moved on average once every seven years. It is now calculated to be about on average once every 23 years. This is probably due to a change in culture than anything else.
“People are sticking with what they have got because of the cost of moving, and although estate agents costs have fallen dramatically over the years, other taxes make it harder.
“So as house prices increase, it is a harder challenge for first-time buyers, particularly with values going up faster than rates of pay.
“It is also very hard, and has been for a number of years, for them to get a deposit, which is a huge factor to take into account.”
Meanwhile, house prices have soared by more than 450% in some areas of Ipswich over the last 20 years.
Research by the Office for National Statistics showed that, in the Chantry area, values increased from £17,000 at the end of 1995 to £97,000 at the end of 2015 – a rise of 471%.
Prices have jumped from £23,000 to £107,950 (369%) in the Whitehouse and Westbourne areas, from £29,998 to £125,000 in Gainsborough and from £35,000 to £146,000 in the Rushmere area.
Ipswich MP Ben Gummer said: “This is both good news and worrying news. The good news is that Ipswich is developing and I think we should celebrate the fact that Ipswich is now a much more prosperous place.
“The worrying news is that house prices are now out of reach of significant number of first-time buyers and that is down to a failure of policy over many, many years across government.
“We have just failed to build enough houses and when demand outstrips supply, that’s what happens; prices go up.
“We need to be building many more houses, but at central government, we are really pulling every lever we can to increase housebuilding and at a local level we are doing the same.
“We have just identified space for another 2,500 houses in Ipswich in addition to the 5,000 to be built on the Northern Fringe and the important thing is to start building quality development so that we can provide new houses, especially starter homes, and homes for young families.”
David Ellesmere, leader of the Labour-run Ipswich Borough Council, said: “Ipswich has seen a significant amount of growth but the amount of houses being built, not just in Ipswich but as a country, has not kept pace with demand, and that is why we are seeing house prices way out of the range of most first-time buyers currently.
“We need to desperately build new homes and the council is bringing forward development at north Ipswich, which is going to see thousands of new homes there, and also building new council homes – we are just coming to the end of the Bader Close development which is the largest council home development in Ipswich for 50 years.
“We have got new housing off Ulster Avenue and we are also getting empty homes back into use as well, where we have had a significant amount of success. We have agreed more compulsory purchase orders on empty homes in the past three years than in the past 30 years.
“But all of this does need to stepped up because house prices are rising as a foreign wave of money invested in London gradually spreads its way out to the way of the country.”
Alex Leader, associate director of residential development sales at estate agents Savills, said: “They have increased but they are still affordable. Chantry is £97,000, which is still relatively cheap across Ipswich.
“But while first-time buyers could probably afford the monthly mortgage repayments, what they can’t afford is the deposit, but that is what those government initiatives are there to do.
“So anybody wishing to get on to the ladder, especially those who just can’t muster the deposit needed in order to purchase, they need to be looking at that if they are struggling. “
A Department for Communities and Local Government spokesman said: “We want to ensure anyone who aspires to own their own home has the opportunity to do so.
“Government recently announced the biggest, boldest and most ambitious plan for housing in a generation, doubling the housing budget and offering a 20% discount to first-time buyers.”