To be a first-timer at anything is clearly nerve-wracking. Take first-time
callers to radio phone-ins. How nervous and timid they seem. “Hello,
first-time caller,” says the kindly phone-in host, an especially sensitive
tone in his voice. Because, you know, the first time you pick up the phone
and call your local radio station - let alone Five Live - is scary.
Yet nobody, not even people singing at the Royal Opera House for the first
time, or MPs giving their maiden speech, has quite attained the “poor little
moi” status of the First Time Housebuyer. First-time buyers. What a total
pain those three words have become.
First-time buyers must - and I stress must - be treated with as much care and
solace as ickle baby bluetits that have just fallen out of the nest. They
have to face off not only the big bad birds that are already on the housing
ladder, but the horrid estate-agent squirrels and the nasty tomcats of
buy-to-let land, always ready to crush their hopes and feathery ambitions in
their rapacious jaws.
God forbid that we should look at first-time buyers as lucky so-and-sos who
have probably been living off the Bank of Mum and Dad while working in the
City, and thus have a nice little deposit ready to slam down at the
appropriate juncture. Or those who, up until about eight weeks ago, at
least, could qualify for a 100% mortgage. Nor should we see them as
liberated souls, sans housing chain, who don’t have to worry about moving
near a decent secondary school, or free spirits for whom a house-price
wobble is only ever going to be good, since they will never be in negative
equity. We must always see them as people who must be pitied.
Oh, and the other tragic thing about FTBs is that they can never be expected
to move into an area they don’t know. Why not? Perhaps because the purchase
and subsequent use of an A-Z is beyond them. But that’s how cities expand.
That’s how gentrification happens, loves.
When I was a 29-year-old first-time buyer, in 1994, did I cavil and wail about
not being able to move in next door to my parents in leafy (and far too
expensive) Wimbledon, southwest London? Certainly not. Newly married, I
charged off to Hackney, in the east, a district so far from the orbit of my
family, it took 10 months before any relation plucked up the courage to
visit me. It was rather fun.
We moved into the house and, because we were FTBs, unpacked all our lovely new
stuff, then left the empty boxes outside by the bins, thereby demonstrating
what lovely new stuff we had. Two weeks later, we were burgled. That comes
with the territory of being an FTB.
“First-time buyers always complain because they can’t buy that flash City
flat,” snorts David Whittaker, managing director of the broker Mortgages for
Business. “Well, when have first-time buyers ever been able to afford that
fanciful notion?” There may have been less moaning and whining in years gone
by, when it was possible to get tax relief on the first £30,000 of interest
payments on your mortgage – which was a great help to first-time buyers, in
particular. That ended in 1990, however – and the market crashed shortly
afterwards.
These days, the average first-time buyer – there were 358,000 last year and
401,000 in 2006 – has no tax relief to help, and steep property prices to
tackle, so perhaps some of them have a point. Not to Whittaker.
“I don’t think they have a reason to moan,” he says. “It’s a question of how
much of your disposable income each month goes on housing. Whether that is
rent or interest on a mortgage doesn’t matter. And, if stepping from renting
to buying doesn’t involve some commitment, it’s hardly a great transition,
is it?
“I know I sound like a grumpy old man,” Whittaker continues, warming to his
theme, “but I feel that an entire generation out there has yet to understand
that you need to make choices about how you spend your income. And that
choice is, ‘Am I prepared to forgo some luxuries or continue to rent and
bemoan the fact that I can’t get onto the housing ladder?’ ” Not all
first-time buyers are frivolous youngsters who prefer clubbing to paying off
their mortgage. In fact, there is no such thing as an average FTB; you
merely have to be on the market without anything to sell. So, one half of a
divorced couple could be a FTB.
“Clearly, they are important in driving the housing market, but they shouldn’t
be seen as special cases,” says Rob Thomas, senior policy adviser at the
Council of Mortgage Lenders. Should they have little presents along the way?
Discounts on this or that? Er, no, Thomas says – “Although we do think that
stamp duty should be adjusted, as the step jumps from one level to the other
are inefficient. They ought to be replaced by a graduated system in which
you pay the higher rate only for what comes in above a certain level.”
All right, FTBs. It is tough out there, but please don’t squeak too much about
it. In a year or two, you too will be a rapacious seller on the housing
ladder. It happens.
Rosie - you seem to have completely and utterly missed the point that as a newly-wed in 94 you WERE actually able to buy your own home. That's simply not possible for us in a town where average 1-bedroom flats - yes, 1-bedroom flats - are 11 times average earnings. Are you completely out of touch?
Joanna, Oxford, UK
The price of an average first-time property rose from £52674 to £159494... thats a little over 300%.
Consider a safe Loan to Value of 80% and that a borrower is putting down a 20% deposit on the property and only borrowing 3 times their annual salary.
1997:
20% Deposit £10,535
Annual income for 3x borrowing
£14.1k
2007:
20% Deposit £31,891
Annual income for 3x borrowing
£42.5k per year
Over the period 1997-2007, median gross weekly earnings have increased 42.5 per cent, £457 in 2007 compared with £321 in 1997. Which equates to average salary of
1997 - £16,692
2007 - £23,764
Overall the pace of house prices are out of step with earnings to such a degree that few people can afford to buy and the number of first time buyers has shrunk to an all time low.
An accessibility index, developed by RICS has found that the cost of becoming a home purchaser in Great Britain has worsened by 351 percent since the most accessible point in 1996.
This is the reality.
Mark G, London,
First Time buyers are priced out and will continue to be this way until homes drop about 30 or 40% . If banks kept to the rule of only allowing 3 x wages, there is no way homes would be so high. As for buy-to-letters, I think they are causing some real pain to this country. I save money, earn above average wages and I think I would be considered rich in most countries of the world, yet I cannot live in my own home.
Mr Average, Swindon, UK
Of course FTBs should get no special favours. Instead of rewarding hard-working young people who are unprepared to take absurd risks with their finances, it would be far better to reward the chinless wonders and spivs running the UK banking and property industry with bank bailouts, subsidized bank interventions and other ill-conceived policies designed to compensate them for their utter stupidity and greed.
Paul, Dubai, UAE
Why don't we take a leaf out of America and Europe's books. They rent for many years before eventually buying, something extinct in Britain- a hangover from Thatchers rule.
We still have the same expectations of the housing market, despite it having changed so dramatically. I don't expect to buy in the future, it's just something we have to get over.
wiltshire wurzel, swindon,
Rosie Millard....
Why?
Bill, London,
You'll have even less sympathy when a ftb buys one of your properties at the 1994 price.
paul, rugby,
No need for pity from Rosie ,afterall , she's going to need all her strength as she gets gazundered into oblivion over the coming months while no doubt trying to offload her 'portfolio'.
DbD
DbD, Glos',
This is a typical property speculators article. Trying to defend indefensible house prices which are trading at historic mutiples i.e. the clasic asset bubble rampers . FTB,s wait till the bubble bursts and then buy when multiples revert to norm.
david barker, eastbourne,
Let them eat cake.
Roy, London, UK
It's exactly this kind of journalism, and comment more generally that makes me want to leave the UK and head for Canada ASAP. Straw men. Pick a generalised type of person that, for some irrational reason you've decided you don't like - morotist, cyclist, parent, non-parent, buy-to-letter, first time buyer, estate agent...heck, it doesn't matter. All that's important is you create a monstor character, distorted from all reason from that person, then HATE them, DESPISE them, they caused all the problems in your world.
British journalism is filled with this kind of petty rubbish. Rosie Millard herself, in this kind of article is providing perfect foddor for a "Rosie Millard" straw-person - so next tale of nagative equity of buy-to-let woe, the "Rosie" straw person will pop into some people's heads and they'll be thoroughly delighted by it, whether the person deserves it or not.
If you want a housing market, FTBers are necessary. End of. And guess what? They're all different.
Cath, Edinburgh,
I am a first time buyer. I 'missed the boat' when I experienced houses rising well above what I could afford within a matter of weeks. As others have stated: it isn't fear of buying a place, it's the fact that houses are now priced well above what most people can afford. My parents bought their 1st place for 3x my fathers wage. I am now looking at 8x my wage for a similar house. Can you see the connection?
My family found itself in the position where we had to rent a substandard house from a BTL landlord who could kick us out with 2 months notice - a situation I was not happy with. We could have rented a bigger place, but the rents are staggeringly high. I have no bank of mum & dad. I don't work in the city.
We managed to get a council house. Remember those? It is a different world from when you were a first time buyer Rosie. Council housing used to have a stigma attached to it, now I am the envy of everyone I know - the priced out generation - I have a secure HOME (not property!)
Lance Cooper, Bury St Edmunds,
By god this article has made me so angry.
You, madam, should be forever greatful of your age and the era of which you entered the market.
James Smith, Luton, Beds
These kind of people (RM) know that they will end up with inheritances to sort everything out for them... They don't have a clue about what 'impoverished' means, and they never will..*sigh*
Neil, Cambridge, Cambridgeshire
Rosie being a first time buyer who has held off buying for years due to the fact that a I felt it was too risky taking on the debt I find your article very offensive. It is patronising and bitter. FTB's have been squeezed out of the market by greedy Buy to letters and in time hopefully all hardworking English people will be able to buy their own home without fear of negative equity. This is currently not the case due to our greedy debt fuelled ways that appear to be destroying the economy bit by bit!
Duncan, London, UK
A disgraceful, bitter and absurd piece of journalism. First time buyers never expected to be able to live the nicest London suburbs - at least in your day, Rosie, places like Hackney were an option. I know of city workers who can't even afford to buy a family house in Hackney now!
A 1 bedroom flat costs more than 250 grand in most parts of London now - at three and half times salary with a 10% deposit you need to be earning 65 grand to get a first foot on the ladder. Is that what you think most people in their 20s and early 30s are earning?
Clare Montagu, London, London
Nationwide are now forecasting a 10% drop in house prices this year and a further 5% next year; so the FTB will be in a stronger position soon whereas BTL will help matters by increasing supply before they lose too much money. Me thinks you may be wrong Rosie Millard.
john, milton keynes,
The government took a laissez faire approach when prices were heading up. Now they must take a similarly hands off approach and let them falll if that's what the market will have.
I don't want your sympathy Millard and you sure as hell won't have mine if your intolerable smugness has led you into trouble.
Jonathan, London,
That is fine, I do not want anyones pity. In fact I am happily saving and waiting.
Just as long as property speculators do not want pity when the housing snake bites them in the bum and I can buy their houses as a home for myself at the equivalent price that you bought in 1994.
matt, bristol,
I asked an older colleague of mine what the average salary of people in my current position was in the mid-1990s. I have looked at the Halifax and Nationwide figures. Based on that I would have been able to buy in my part of London for 3 times what my salary would have been at the time. Now I would have to pay 8 times my salary in exactly the same area.
This means that in constant terms i.e. like for like in terms of prices and salaries, it is much harder to buy the same property. Please do not sound as pompous about how much hardship you had, given you bought at the bottom of the market. You should ask one of your younger colleagues doing the same job how much they earn and see how much the property you bought then costs now.
You would not be able to buy now. I have not meet FTB matching the criteria you use (but am sure they exist). They have tried to be prudent and saved deposits, but prices have risen faster than their deposits and wages. They are looking in average areas
Raj, London,
In a year or two Millard, first timers will be the ones helping offload the portfolio from you parasetic, BTL, ramp up the market, contribute to nothing, 'everyone should be involved in this huge wealth creating excercise', society destroying, my cars better than your car types. This whole episode has been one giant ponzi greed fest and all of those who believed the hype will be stung. Bet you think they deserve sympathy. Maybe you could demand the Govt bail out their stupidity in your next article? Sympathy should be reserved for everyone who's had little choice but to gamble over the last few years while just wanting a home so they can get on with their lives. But your kind won't have any sympathy left over after you've exhausted on yourselves! You should be ashamed Millard!
ben, bedford, UK
I am a *potential* FTB in London and on a salary of 37k i can't afford a house right now. But I do not ask for sympathy! On the contrary, i rent a beautiful place for approx 70% of what mortgage would have been, i am not responsible for the maintenance of the house, and i am able to take a 6 month placement in Helsinki later this year without worrying about letting it out.
Currently i save 18k per year, and *may* buy in 2013 when i have saved 150k. However i'm not sure if the costs of mortgages will ever drop to a point where i'd be interested in taking one on. one of the great things about the housing boom and its attendant stagnant rents (still paying same as i did in 2002!) has been how so many of us have realised the freedom that has come from renting.
I will never squeak about the housing boom, or the housing bust. as a renter i too have won, cheap rent, no debt, freedom
The only black cloud on the horizon for renters really is the probability of job losses due to recession.
stanislau, finsbury park,
Well, with very few FTBs around, STBs and others might find it rather difficult, if not impossible, to move up on the ladder.
The fact is that it was nowhere near this hard to be a FTB back in the '90s, and I know what I'm talking about as I was a FTB in 1999.
Peter Vuorela, London,
A couple of questions: when you were a first time buyer in 1994, how much was the house you bought? And how much was you salary? Divide the two. Now, how much is the average house price today? And how much is the average salary. Divide. Compare with above figure. Get it?
George, London, UK
Why so much bile? Is it the sneaking realisation that a first time buyer will be getting one of your Buy To Lets at a 50% discount in a few years time?
Tom, Zurich, Switzerland
So Rosie, what is your point?
Tempted to offload your BTLs after April's change in CGT?
Michelle V., richmond,