According to the latest report by the Nationwide House Price Index, house prices fell by 0.7% in the month of October after staying flat in September. This provides evidence that the market decline is becoming more entrenched. What’s more, the current market situation went completely against the economist’s predictions, as it was almost twice the decline originally thought. This brings the average house price in the UK to around £164k in October compared to almost £167k in September according to Nationwide.
One of the consequences of the current state of the market is the revival of the ‘accidental landlord’ according to the Association of Residential Letting Agents. They suggest that as many as a 33% of its members had seen a marked increase in the volume of homeowners who opt to rent their property as they cannot sell it. This is thankfully nowhere near the peak of the accidental landlord craze back in 2009 where 94% of the agent’s members reported an increase in this type of activity. It goes to show that the ‘wait and see attitude’ that many have adopted in the past, is not a thing of the past.
Despite the drop in house prices, the House Builder Federation report that First Time Buyers are effectively shut out of the market place due to the current deposit situation. They say that the average FTB would need around £37,000 as a deposit to buy an average price starter home, however the average FTB annual income is no where near that amount. This leads to a situation where an FTB would need to save every penny they earn for more than two years to be able to get on the property ladder. This is perhaps one step to far for any FTB, however even if they waited and tried to save for five years they would need to save around 45% of their annual salary. It goes to show that any FTB who wants to enter the housing market, not only have they to consider the big question of ‘when is a good time?’ but also ‘how am I going to be able to afford to do it?’