Developers appear to be back-tracking fast on the new FirstBuy scheme, which they put together with the Government.
The Home Builders Federation conceded: “In an ideal world, you wouldn’t offer shared equity. But we are not in an ideal world.”
This morning's Halifax survey shows that in this less than ideal world, house prices remain stubbornly unaffordable at nearly seven times average FTB earnings, with signs of only a very slow downward shift.
Today, the Halifax said house prices in March went up by 0.1%, to an average of £162,912, a quarterly change in a downward direction of just 0.6%. However, the March average house price represents an annual fall of 2.9%, and the Halifax expects a further 2% fall this year.
The much-trumpeted FirstBuy scheme will allow 10,000 first-time buyers to get on the home ownership ladder by chipping in just 5% deposit on a new-build house. The Government and the developer would each contribute 10%.
However, developers are now worried that their share of the £250m that the industry will collectively pump into the scheme will appear on their balance sheets as a loss, whilst showing little return.
Under the FirstBuy scheme, the loan is interest-free for five years. The buyer does not repay anything until either the property is sold or year six, when interest is charged at 1.75% plus inflation, and plus 1% after that. Although final details have yet to be published, it is thought the loan would not have to be paid back in full until after 25 years.
The scheme has also come under attack because as it is limited to new-build, it will not help ‘chains’ and therefore not deliver any benefits to the wider housing market.
There are also strict limitations: first-time buyers must earn no more than £60,000 per household to qualify, and will only be allowed to have one more bedroom than their initial needs allow – eg, if they are a couple, two bedrooms, and if a couple with a child, three bedrooms.
FirstBuy had also been criticised as really being a help package for developers wanting to shift unsold properties.
But now developers themselves are having second thoughts.
Alistair Leitch, finance director at Bellway, said: “For the industry, it is £250m that cannot be spent on land. We don’t want to be too tied up. We will participate in it, but we will be selective.”
He said that the real key to first-time buyers was banks offering mortgages at higher LTVs.
So far, lenders have given a muted reception to the scheme, and Paradigm Mortgage Services yesterday called for FirstBuy to be expanded to all first-time buyers, and not just those who meet the scheme’s criteria.
It criticised the scheme for not helping first-time buyers who earn over £60,000 and those who do not wish to buy a new-build property.
The scheme is earmarked to start in September. Of the £250m on offer, £210m is destined for England, while Scotland, Wales and Northern Ireland will share the other £40m.
But Paradigm said that a lack of innovative mortgage products might hold this back.
Bob Hunt, Paradigm’s chief executive, said: “The FirstBuy scheme is a positive but, given it is for new-builds only, the purchases made will not help develop any property chains, whereas first-timers buying other properties are likely to be the start of a chain which could elicit five or six further property transactions, ultimately delivering a considerable benefit to the wider market.
“The other important point to make is that it is a limited pot of cash and mostly focused on England. Many potential first-time buyers in Wales, Scotland and Northern Ireland will only have access to £40m of FirstBuy funding, so it is imperative the mortgage industry also helps provide a variety of solutions for those who may not be able to use the scheme.”
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Comments
@Margo
Yes it says something that people are so fed up with the UK that they want to move to a country with a similarly over-valued property market.
The difference, of course, is the size of the country, the size of the population and the fact that Australia is commodity rich and making a fortune exporting coal and steel to China.
One day their market will correct, their government is as determined as ours to bail the bankers out and to ensnare the next generation in debt slavery.
Are you happy with the way things have turned out? My son tells me half his mates want to leave this country. Those that stay are condemned to renting or taking on massive mortgages (at 300 year low interest rates) and, of course, they'll be paying taxes to pay all our pension and health care costs and the interest on the debts we took on to bail out the bankers.
People today spend massive amounts of their take home pay on mortgage interest. Do you think it would be better if houses were half the price and people had a lot more money to spend - generating demand and jobs in the economy - which would create more demand and more jobs etc - a virtuous circle.
Are you happy with the way things are? Bankers get rich - the rest of us are getting poorer every day. Happy with this?
Thinks the part estate agency played ramping the market for the last 13 years was a good idea? Happy transactions have halved? Seems like good news all round to me!
Aye, i'd considered putting Espana as well but thought it's not much cop having an affordable home with 20% unemployment...
Still, good for you and good luck with the Brazil move.
Or a little Spannish hacienda - provided you can do without work? Personally I'm learning Portuguese with half an eye on Brazil.
That's true, I guess either the US or Eire/NI would be better in that regard.
@SBC
Point taken and I agree with you but to move from the UK to Aus because you can't get a foot on the property ladder is like jumping from the frying pan into the fire.
Margo, you're missing the point there. Yes, the AUS property market is also in a bubble and will (as all bubbles do) also pop in the near future.
The point Mike is making is that the relentless pursuit of unsustainable HPI has impoverished the UK (of course, we're not alone) and the sociological effects not yet counted will be felt for years to come.
It seems to me the only HPI cheer-leaders are those that have (in their own mind) counted the cost of their unearned gains.
@MikeWilson
Of course, houses in Australia are dirt cheap aren't they?
@Swep
You said: "Does anyone on here actually think that high house prices are good for the economy? If so, exactly who benefits from high house prices?"
Deafening silence is the reply because, if anyone actually stops to think about it for a minute (it doesn't take long) they realise is that all high house prices do is suck money out of the productive economy and into the hands of the lenders who are only too happy to keep lending more and more and more and more into a property market - until, of course, one day they go broke and have to be bailed out.
But, no lessons have been learned and as soon as a bit of the debt has been paid down, they'll do it all again.
@Ray Evans
Hi, I said to be sustainable the market in the South East needs to halve. I don't think it will - at least in the conventional sense. What we are in for is 20 years of stagnation which will effectively halve prices.
And, if in the meantime we get significant rate hikes, that will do the job that much more quickly.
Talking to my grown up children over the last few years ... I've just realised something. A lot of young people are so disillusioned with this country that they are emigrating. My 22 year old's ex girlfriend is off to Canada on a 2 year working visa in July - she has no intention of coming back. Two of his mates - one a plumber, the other a car mechanic - have just emigrated to Australia. Not gone there for a year to 'travel' - they've gone for good. And so it goes on. My son is desperate to go too - he tells me it is a common topic of conversation amongst his peers - where to go, what the jobs are like, the money, the houses etc ... all because they have realised they will never get on the property ladder over here ... at least not without a mega, mega mortgage and a massive risk that rates will rise significantly during a 25 year mortgage term.
Although, of course, a 25 year mortgage term is nonsense these days. People cannot afford to repay a mortage these days - and pay off their uni fees - and contribute to a pension and run a car and pay the bills etc. etc. A mortgage these days is a bank loan for life that just gets bigger every time you need to move.
Still, never mind eh? In the long run we'll all be in care homes looked after by Eastern Europeans who couldn't give a fig about us while our sons and daughters live in countries where they feel they have a chance of getting on in life. Not in a country where a whole generation is determined to rob the generation after it blind - insisting that the following generation should pay anywhere between 3 and 30 times more than they paid for their house.
A 3 bed semi for £11k when I was 21. Now it's 300k and the wage for the job I was doing then has gone up by a factor of about 5.
PeeBee, i really cant work out what your point is? Yes prices will rise, but i disagree with the premise that it does not matter what people think- it does. The reason is the excessive rate of the rise in house prices in the past decade is largely a reflection of the policies of the govermentv- which we elect. Take a look across the water at Ireland, and ask yourself why they are in such a mess..........and realise that prices also fall. I've been a house owner for the past 25 years but i cant see how rampant house price inflation has benefited me.........unless i sell up and live in a cardboard box. I can however, see how excessive house price inflation damages the economy by diverting investment from business and other productive areas of the economy into bricks and mortar.
Porn, Viagra and hookers.
swep: It simply doesn't matter what people think! House prices are what house prices ARE. Like fuel. Higher prices mean more money spent buying fuel; more taxes; higher commodity prices due to additional haulage charges; shop prices going up as heating and lighting prices increasing; some people buying less fuel - and some moaning all day but not changing a thing about what they do on a day-by-day basis.
In a world where EVERY resource is scarce and becoming MORE scarce, then prices will rise. Those that CAN afford, and WANT to buy, WILL buy. Those that CAN'T afford, WON'T.
Let's have a revolution. Let's create a new market - one where everything revolves around the value of ONE. A loaf of bread is ONE; a car, ONE; a house, ONE... you get the picture.
You get paid ONE a month.
What are you going to buy?
Does anyone on here actually think that high house prices are good for the economy? If so, exactly who benefits from high house prices?
Started to loose the plot here. So the lead story is viewed as being a handout for builders and won't make much differance to anyone else. It won't be available to just any FTB and builders aren't actually going to get much out of it either. It won't help the property market in general.
Affordability is generally no longer worked out on income multiples. Worked fine before as other credit was tight. You had to see the bank manager (he was in your wardrobe but the young guns won't know that) and he said no and that was the end of it. You went without if you couldn't afford it. It is however still used as a good starting point today.
Lending today is reported to be arranged on life style affordability as we had become a credit debt nation during the last 12 years of cards etc for cars, holidays etc which one couldn't afford but no-one seemed to question or the fools allowing themselves to get into the mess and takesd a big chunk out of the income multiple. The argument for "her going indoors with child" etc is risk assessed by lenders, or we are led to beleive. Tricky one if they don't want children or regrettably can't from trying.
If one is saying only use a mans income for affordability ...... answers on a post card, as that may be just not be practical even if correct. Prices "in general" today would have to fall by another 50% in my area for a single income to support a mortgage.
I dare say you are. I’m good looking as well.
I don't know about anybody else but I for one am dead jealous of wardy. Ha ha ha what a clown.
Do people think that couples buying together and mortgaging for 25 years is a new thing? This conversation has turned to expose people that simply do not want to buy. End of. House prices, mortgage availability and the such are just red herrings when the truth of the matter becomes apparent. Be it jealousy, kicking themselves because they didn’t buy early enough, reluctance to save, whatever.
It also interests me what property types the 'anti market' people see themselves buying. Are we talking 1 bed flats or 3 bed semi's here? Do they want a roof over their heads or do they want to speculate?
At the end of the day pay rent and live for the now or save a deposit and improve your standard of living in the future. Nobodies pointing a gun to your heads.
Like nutty preachers on street corners extolling the virtues of their god forcing passers by to listen, why oh why, do anti home owners feel the need to post on here? It it hurts so much don't read it!
People know the risk in buying and make their own choices, you make yours and rent for the rest of your life by all means, but do please go and find some other site to infest!
No doubt many of you will be in your Goth kits protesting at the Royal wedding and smashing up other soft targets like the you are jealous of.
Pee Bee - Ray has indeed seen it all before. No doubt he was around 300 years ago when interest rates were last this low. He was in the business of buying and selling houses 150 years ago when the last run on a British Bank before Northern Rock took place. No doubt he also had to borrow eight times his salary to buy his first house and his partner had to work full-time for 25 years so they could make the mortgage payments...
On this site you can even read him referring to the current housing market situation as one that comes and goes every ten years.
Indeed, the man's wisdom seems to know no end. EAs definitely need more people like Ray around to help them understand today's housing market.
As per usual, the real problem remains in the shadows. House prices are double what they should be,
Ray - I would have lot more support of your opinions if you were to tell us that you are in your 20s and that the path you are advocating is the one you and your partner are embarking on.
Instead, I get the feeling that you are probably twice that age and bought a house long before the banks opened the floodgates of credit that saw prices triple in a decade.
"1.What if a single mortgagee falls ill or becomes pregnant? "
You are right - there is inherant risk in any mortgage. In scenario 2 however, hopefully whoever made her pregnant will be working and be able to help pay the mortgage
"2. Two incomes must present a better risk than one, especially in view of 3. below "
SMP is £6,500 per year. If you borrowed £180k (3 x joint salary) based on a couple earning £30k each and then one went down to £6.5k, that would be a bummer to say the least! Much less risky to treat the second income as a safeguard!
"3..At least a womans job is kept open and there are cash handouts. "
As above, however when she goes back to work (invariably part time) her income largely goes on childcare.
"4.Delay starting a family. "
The rate house prices are going if everyone did that, women would be out of childbearing years before a couple could afford to buy......mind you, I suppose that would sort out the demand side of the equation!!
Okay then Ray, let's turn this around shall we. Would you be prepared to take on a 25 year debt burden that was so large it required two salaries to service it?
Whilst I disagree with what you advocate, I would respect your opinion a lot more if this was financial advice you would equally give to your offspring/family/friends or whatever.
If that isn't the case then the only correlation I can draw is that - for whatever reason - you don't want prices to fall but to keep them inflated whatever the cost.
Ray Evans: NO - don't leave it at that!
You are one of the only ones making sense here...
Your last post knocks all other argument off its feet.
You've been there...seen this before - MORE than once... will see it again.
@Sibley's B'stard Child.
1.What if a single mortgagee falls ill or becomes pregnant?
2. Two incomes must present a better risk than one, especially in view of 3. below
3..At least a womans job is kept open and there are cash handouts.
4.Delay starting a family.
Not many can have everything in life - it's a matter of choice, as it always has been.
I know that this is not the answer to everything and it is not intended to be so.
How did I managed to run a multi-office business through previous downturns by being wrong more than right! :0)
I shall say no more on this particular post.
"For the industry, it is £250m that cannot be spent on land."
Not exactly. Firstly, the entire deal is £250m, which the developers are only supporting by 50% - so halve the above figure for a start.
Secondly, it is the equivalent of 10% of the property value. Although people seem to think that builders are able to "sell one, build one free", that is far from reality (currently, many developers would KILL to make 10% profit on a house sale...), and this is damage limitation we are talking here. The quicker these properties sell, the quicker you stop the bank charges eating into the end sales revenues.
Those that have dedicated New Homes Departments know that there are few more committed vendors than a developer. They have not built these properties to keep them - simply to turn over to keep their businesses going. They will usually be the first to drive their own prices down in order to keep the wheels in motion - sometimes to nigh-suicidal levels. You might say they can afford to - the truth is, they can't afford NOT to...
Taking the 'average' UK property price of £162500, the money will allow some 7600 deals to take place. HARDLY knocking great holes in Estate Agents' targets - less than 1.5% of the total UK market. Assuming that only 20% of developers have some tie-up with Agents, then there will be some fees generated if leads are passed.
£125m worth of land sounds like a fair chunk, doesn't it? Depends where it is. Won't get you much in the Deep South, but will buy you a reasonable city-sized lump pretty much anywhere else. But then break it down into bite-sized lumps; builders will chip £50k here, £500k there off the next land deals and before you know it, they will be evens (and having got the purchase prices down, they will endeavour to keep the levels where they are, naturally!)
EVEN IF the developers couldn't claw back the 'cost' of this via future land price reductions, at a figure of £500k per acre (oops, sorry - £1.25million per hectare...!), and at the PPS3 'norm' of 40 units per hectare, then the 'loss' would be approximately 4000 plots - again, hardly a disaster when considering the number of new homes built per annum. But trust me, that will not be the case. Developers will ALWAYS find the means to build - AS LONG as there are buyers to buy from them.
Developers already reap the rich premium profit on new units.
Very like the day you drive your new car of the forecourt you have lost money, second hand stock will only sell significantly below New prices, so why push cash in to this scheme and help more get into negative equity almost immediately?
People should only spend what they can afford and if there is nothing about where someone is willing to part with it (and dont have to) then so be it.
No one is forcing people to keep prices at current levels by buying - in my area we dropped 18% which was recouped in 20 months as the yeild for an investor is 4.75%+ with no capital gain which makes it a viable proposition. Therefore the prices on FTB properties will remain at this level until the benefit is eroded by rising interest rates or drop in demand for rental. However the rental demand is being fuelled by all the FTB not buying so.....
On the basis of crashing prices if that amount of money was lost in bad debt, plus all those people needing rehousing then you are liable to see a run on the currency which will mean all of your savings will not be worth the notes they are printed on. See the Weimar Republic and what happened there.
Demand in areas where no one wants to live (high crime/low unemployment) are likely to plumet and thus make other areas more desirable with increased demand and thus prices. Bigger gulf between have and have nots and ghettos forming - see what happened in Washington DC in the 80s I think it was.
Market forces will prevail either way
Kirk
Market prices are market prices they are not over paying - on the same rationale petrol should halve if no one buys it but that is not reasonable - same applies to any demand driven product including housing.
People seem to think that houses are different to say stocks and shares or petrol or food. If you can't afford it you can't afford it, if you buy it and its cheaper elsewhere unlucky thats life.
At the end of the day life isn't fair and people need to face up to that.
Uh oh Ray, that looks suspiciously like bubble economics to me. Basing mortgage affordability on dual income is folly of the utmost. What happens if one of them becomes out of work or fall pregnant? In fact, basing mortgage affordability on joint wages pretty much precludes starting a family full stop.
The headline is all about builders selling properties. No chance of it helping chains, re-sales or the economy as a whole. It should be made available to all FTB.
But there is a lot of profit in new builds. Costs didn't rise that much in comparison to the profits they are making since the boom increase. Land did cost them heavily in the south, but then they never did pay the full price for it and many have land banks going back decades in some parts of the country, so are we bailing out the SE again?
Prices will never drop 50% in a free market. It will bleed, prices will continue to fall like pulling teeth for a long time with many going under. In the mean time buyers will be at the other end of the street saving and when affordability and prices meet in the middle, then we will be back to a stable market. Maybe another 5 years, worst hit areas 10 years?
Of course it could all be sorted tomorrow with an instant substantial down value, but that has more chance of happening as is a pay rise.
Most who bought after 2005 can forget about moving, fact they are in negative equity so move on, the market needs to focus on pre 2005, if not 2000 vendors.
I put by FTB deposit into gold. What would have been a 30% deposit in 2007 is quickly turning into a lump sum to buy outright - mortgage free.
I just feel sorry for the savers and the pensioners that the Government is robbing in order to keep nominal house prices around 40% higher than where they should be.
BTW, Santander don't want anything to do with it either.
@Mike Wilson
'.....To be sustainable, the property market in my neck of the woods (South East) needs to halve.....'
No chance - wishful thinking.
A reduction on this scale in any volume will not happen as there is a minmum cost to new builds and most current owners will just sit tight.
I do agree that this Firstbuy sheme is a nonsense and will do little for the majority FTB's
What I do not really understand is that in the South East ( e.g. Rightmove - N Herts) there are already many 2B flats at an asking price of between £140,000 - £150,000. 10% = max. £15,000, balance max. £135.000. So if the lenders would be more reasonable and lend a multiple of a COUPLES (O.K. I know the current criterior) earnings of say £45,000 - say 3 times, it becomes quite a close affordable call.
This does not take into account 'negotiation' on price and it would take a change in lenders criteria I know but not much extra risk?.
This little scenario will probably not change your view, or that of some others, but the future is not as 'black' as sometimes painted?
(After 35 years in this business one learns to be quite optimistic!)
There is only one thing that this is actually about...
Forget 1st time buyers.
This is about subsidising big builders - plain and simple.
The government cannot afford (legally or politically) to be seen handing out cash to the nations homebuilders.
Apart from anything else it is against EU law and would be challenged immediately - unless of course they decided to nationalise them which will NEVER happen.
So this is a neat trick to get around the law and give Barratts and the rest the money they desperately need to prop up their balance sheets.
Imagine being the FD of one of the big builders and KNOWING that you are technically bankrupt if anyone looks at your land bank - because the only reason that they are still in business is because the banks just don't want to look.
Debt free:
I've had a good look at HPC and there is a lot of merit in some of their 'collective' economic analysis of the situation with specific regard to housing: to some extent I've been persuaded in many of my views on the market. Ranged against their assembled evidence and - in my view quite plausible - long-term narrative , all I see most of the time are a mixture of assertions of belief things can't get worse (same as you see here often) or outright boosterism from people with lots to lose. When it comes to argument on the direction of house prices, I think they win.
Where I part company with them, indeed where the site falls down on credibility generally, is where they take that analysis, generally sensible economics undone by the general tone of the place, over-populated as it is with Euroseptic, let's have a tea party, burn the council worker/stop all benefits right wing nut jobs.
And don't forget we estate agents are the devil incarnate from daring to profit from property sales ... we'll be first against the wall when whoever it is they want to run the revolution finally shows up. After Gordon Brown of course.
@Debt free
Much that I think FTB are tiresome whingers with an over-developed sense of entitlement, there may be some common ground developing with investors like me.
Funnily enough I don't want to pay ridiculous bubble prices either. Since we're not likely to see any significant inflation busting capital growth for a long time, it's all about the yield. There is precious little of that at current prices.
You know the market's utterly doomed when a commenting thread in Estate Agent Today reads like HPC!!!
What we have is a buyers' strike. there are simply no first time buyers willing or able to pay the ridiculous bubble prices being demanded by idiots who bought at the wrong time. This latest FTB-trapping scheme won't do anything to prop up prices n the wider market because it's limited to new-builds - if anything it may reduce prices of second-hand property by diverting the tiny pool of FTBs into new-builds.
I hate to think what the property market's going to look like in 6 years time when all the loans start accruing interest at 1.75% + RPI (just think what RPI's likely to be by then....)
There's only one sensible course of action for potential FTBs - don't!!!
Just wait, and wait, and wait. All pyramid schemes collapse in the end and this one's no different.
@ Voice of Sanity
Say what?
That is, like, exactly the opposite of what I was saying.
I'm saying that the Government should get out of the way, stop trying to prop up the market and let the bubble deflate. If some people who paid too much get burned then so be it. That's what's called a recession.
I have to say I've never seen shared ownership as anything other than a massive financial risk, a con trick foisted on generally naive/vulnerable people. I have never had anything to do with it, and never WILL have anything to do with it.
There's precious little evidence that I can see that anyone was ever 'helped onto the property ladder' via these vile schemes, the only benefit accruing to the developers. If the developers themselves are turning against the idea - well what does that say?
If the government really wants to get the property market moving it could do worse than come up with a stiff tax on the vast land banks many developers are sitting on - use it or pay through the nose for it - we'd soon see things moving again at 'affordable' prices!
As for the continued bleating that all our housing woes are the lenders' fault, I would concur that yes, reckless lending got us here (prices way above realistic levels); and there may be an element of over-reaction in deposit requirements; but if it was MY money (and arguably, with taxpayer owned banks, it is...) I wouldn't lend it either when prices are so clearly still set for a fall.
Get the crash over with, and I suspect we'll see lending opened up, at least back to where we were around year 2000 when it was minimum 5% deposit, 3.5 times single salary, 3 times + 1 times joint, with few/no of the high multiple and interest only deals that boosted, then poisoned the market in the first place.
When will politicians like that grinning idiot Grant Shapps wake up and realise that re-setting prices is the only way to get things moving again which is what everyone wants (us, our customers, and the government presumably too)?
This zombie market needs some radical policies to re-animate it and clapped out shared ownership schemes are not the answer.
Kirk
If no one wants to buy or demand falls so will price - it is not up to the Government to create a false market and subsidise one section. I will have to work to 75 with less benefits and pension due to fiscal mismanagement from the last bunch and pay prices inflated by the older generation who have benefitted from years of inflation and thus push up prices and now you are saying my taxes should be used to fund the younger generation to down value anything I own.
I wouldn't run for office on that opinion!
Good points Mike. I'm a FTB but am not getting involved until the market deflates significantly. My deposit is sitting with NS&I and getting interest of RPI+1% tax free, my partner and I are also adding a couple of grand per month so if it takes 5 years then so be it. Who knows, maybe we'll buy in cash.
We refuse to bail out mugs who got carried away after watching too much Kirstie and (bankrupt) Phil.
Spot on Mike.
Back to the article, an already laughable FTB scheme reaches status of lampoon. Out of the maximum 10,000 FTBs it's supposed to, ahem, help; my guess is the final number at the end of the two year period will be in the treble digits.
Still, at least Shapps can say he's doing something for FTBs whilst neatly sidestepping the issue that prices are too high.
As for the Halifax index, a rather underwhelming MoM +0.1% but a more cheery YoY -2.9%
There is no need for home ownership. Having lived in europe for years property is unaffordable beyond our issues. A colleague was paying off a property his Grandmother had bought as they have 100 year mortgages - imagine how that has infalted prices! The point being there are many social issues - firstly inheritance will mean that the gap between better and worse off families will increase as those inheriting will always have bigger funding. On a economic point you cannot fund one part of the market and not the other it is unfair and will not work as this is demand driven. All the time pople are willing to pay the prices they will remain - economic fact. Once governments learn that thgey cannot try and short term long term issues we will have a more stable future
@Jenni
They should suffer because they made a mistake, a bad financial decision. It's not nice but that's what recessions are all about.
Just because some people were stupid enough to pay bubble level prices or remortgage at that level and spunk the equity, are you suggesting that every future buyer for the rest of time should over-pay just to bail them out?
That sounds dangerously close to a pyramid scheme.
Some interesting points Mike, but what about all the homeowners that have moved/re-mortgaged in the past few years? Does the same not apply to them? Why should they suffer too, it is the banks/governments fault afterall !
Yes it is very important that first time buyers be allowed to take on suicidal mortgages at massive salary multiples with interest rates at a 300 year low ... just to maintain the current inflated market.
Yes the whole problem is the pesky lenders not lending enough. Why shouldn't a FTB earning 25k take on a 200k mortgage eh? If they want to, why not let them? Who cares what happens in a few years when they need a bigger place to start a family or interest rates go back to historic levels? Who cares if they lose the house in a few years? As long as they support the market now, that's all that matters. Right?
To be sustainable, the property market in my neck of the woods (South East) needs to halve. Anything else will mean a whole generation priced out of home ownership. Of course they may all be happy to spend their lives renting under 6 month Short Term agreements. Or, then again, they might decide to have a revolution and put two fingers up to those who want them to live their lives in debt slavery.