First-time buyers face more hardship
Friday 13th March 2009, 2:30PM GMT.
FIRST-TIME buyers may find it even harder to get a mortgage in the coming months, lenders have warned.
Prospective purchasers have seen 95% and 100% mortgages disappear during the past year and the 90% deal could follow.
One mortgage broker said it would be ‘disastrous’ for the housing market if the 90% loan-to-value mortgage was also withdrawn.
Nigel Pascoe, director of lending for Skipton Guernsey, said whether that happended all depended on whether the value of island property fell.
‘If the 90% loan-to-value mortgage is to be retained, it is important for property values to hold up,’ he said.
‘In the current economic situation, there is no guarantee that the 90% LTV mortgage will still be available in the future. If the last quarter, where the average house price fell, was a blip, then there is a stronger argument to maintain the 90% LTV.’
Caroline Hards, mortgage manager at Cherry Godfrey, said: ‘It’s going to improve. I think everyone is worried at the moment but when there has been recession before, it has settled.
‘I don’t think it will go back to over-the-top lending, because no one wants that to happen again, but it will ease up. It may get a little bit worse, in terms of the mortgages you can get, before it gets better.’
Currently, first-time buyers are faced with the daunting prospect of needing savings to cover at least 10% of their chosen property’s value, plus fees. That means young islanders looking to buy a £300,000 house need roughly £43,000 to cover deposit and fees.
- There is a four page in-depth look at Guernsey’s housing market in today’s Guernsey Press.
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The problem (some may argue it is not one) is not with the potentials purchasers it will be with those who have bought just before the collapse of the credit market. They will see their values drop and may have to wait longer before they move on/up.
I forsee a massive expansion of the rental market.
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Let the evacuation begin. This island is dead in the water and faces a mass exodus over the coming years. Within 10 yrs Gsy will just be another run down seaside resort – good luck Guernsey.
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Guernsey dosen’t need luck Malcolm, just a bit of backbone to face up to crass statements like yours.
I think we need to evaluate what is important in life. It is only a presumption that everyone in the world wants to buy their own property, and in order to keep up with the Jones’s or the Le Tissier’s or whomsoever they want, young people are being seduced into buying a few bricks to call their own. Take a look at Europe – the majority of people do not own property, but enjoy the rewards of rentals. As Jackie says – hopefully there will be a massive expansion of the rental markets, but at a price that dosen’t make someone think “for a few pounds more I might as well buy”. A lot of the blame for Guernsey’s problems stem with the greediness of people who sold out years ago, and continue to reap the rewards on the back of younger people who cannot afford anything now. As for leaving something behind for your children – try photographs, as memories are far better than a money pit called a house!
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I would love to buy my own house . but there is no way on gods green earth i could ever possibly buy over here i am a guernsey girl through and throgh i have two jobs and still find it hard to servive. people who think that youngsters dont want to buy.need there head testing im 32 and i pray for a lottery win .im not gready just 300.000 would be nice so i could get a house but thats just a pipe dream . i can see im going to be working till im 65 by then there will be no pensions or any money left on the island .( i can see myself sitting on the benchs outside the town church with a can at this rate ) cause i wont be able to even rent a flat . its all about the money on guernsey !!!! what about the guernsey people haveing roofs over there head i think thats more important dont you !!!!
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For a large expansion of the rental market, without inflated rental prices you will need a large amount of rental properties with a lower level of demand. In order for this scenario, I think we would need an economic event of seismic proportions such as:
- a large emigration of homeowners away from Guernsey, with their properties being sold to buy-to-let investors
- an economic collapse resulting in large numbers of house repossessions and emigration, followed by sales to landlords
- a “sell and lease back” scheme, similar to that provided by companies in the UK (be warned though, there are some horror stories with companies of ill repute taking advantage)
- huge building projects with properties being sold to buy to let investors or leased by the State, Soviet-style
Without one of these conditions, I cannot see a huge cultural shift from ownership to rental, basic supply and demand economics simply won’t allow it.
Please feel free to correct me, as I’ve never claimed to be an expert in economics!
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All good points Paul Le P
Theres also the option of allowing more subdivisions to be created thereby creating more rental properties without any new builds or extra land usage.
Its always a catch 22 for first home buyers – a few years ago -high prices and increased lending, this year lower prices but decreased lending. Unless the fairy god mother comes and gifts you a property it is always going to be hard.
The good thing is that now it is easier to save for a deposit – if you have a stable job.
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This IS the end for Guernsey, this is not a debate The whole world has it’s eyes on us and when the bubble bursts there’s no coming back! The greed / overwhelming stupidity of generations before have condemned this place to the shoddy backwater it truly is. There is nothing to stay for – pack your bags one and all head to the hills while you can still afford to leave! This is THE END for Guernsey – believe it now or it WILL be too late.
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Mr Barnes,
Just goes to show how ignorance is a dangerous thing.
So is it ignorance or do you have another agenda.
Perhaps you should join that group protesting against Tax Havens…seems like you were made for each other.
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My concern for first time buyers (and I am fortunately not in that category) is that the States has just decided to do away with Dwellings profit Tax opening the doors to the buy to let investors to buy up lower value properties. This has the potential to soak up the supply and (less likely due to the impending economic problems for Guernsey) force up prices, allowing the rich to profit again at the expense of the normal Guernsey person. The gap between rich and less well off “normal” resident is growing at an alarming rate on this island, and the States really needs to help those who are not so well off, rather than constantly pander to the rich. Bring back DPT now and help the island’s young people for a change!
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I think what Guernsey needs is a balance between homeowners and tenants. There are a lot of houses to let but too expensive.
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I am a local lad who has never lived off island… I have a 5 month old baby & a partner who is working part time to help make ends meet. Seeing as the childcare system over here is so expensive – we can afford to both be working full time…
We live in rented accommodation & we just about break even most months… What chance do we have over here?!
Yes, first time buyers can get on the ladder – but we need roughly a 10-15% deposit & can only get something very small for ridiculous amounts of money!!
Whan you see what you can get for 5 x your salary here & then you compare what you could get for 5 x your salary living abroad (with new salary depending on location) – its a no brainer really!!
Do we stay over here & continue to struggle & pay ever increasing taxes to a States that seem intent on screwing young local families – or do we go & make a new life elsewhere?!
Personally I would prefer to stay in my cherished homeland, however judging by the attitude of the current States buffoons that run our islands, looking after those with money & 2 fingers to those that are struggling, they would be happy to get rid of us!!
So after weighing up all arguments – lifestyle, future for our children, employment, crime rate etc – I have made my decision…
In the words of Duncan Bannatyne…
Mr Trott – let me tell you where I am…..
I’m ooooooot!!
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Not everyone wants to rent as it is dead money!!
I would jump at the chance to buy, but at the moment the only properties that I (and I imagine others) can afford are run down or in need of major work.
And when we get the good news that the bid is accepted, we get knocked for six because the mortgage providers won’t lend on the property!!
Seems to be a viscious circle which first time buyers will never get out!!
10 years time Guernsey will be a stairway to heaven because it will only be the old age who have no mortgage to pay off that will be able to live on this island!!
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I remember Guernsey before the financial revolution took over and it really wasn’t that bad. OK, so there wasn’t huge wealth around (apart from the growers who seemed to be raking in huge profits) but people were a lot happier. There was rental property available at affordable prices and the property market was not inflated by non-local residents buying up huge parts of the housing available and then renting it out at a huge mark-up.
Perhaps i was very naive then (I was certainly much younger)! What disturbs me more than anything are that some of the most important decisions our politicians are having to make are coming from advice from senior civil servants who, on the whole, are not local and have no real interest in the long term stability of the island – and more importantly don’t understand how Guernsey works. They are paid a relative fortune (compared to local employees doing equivalent jobs due to their extra allowances) and some apparently sit on very influential groups which advise our politicians – and most of the time they appear to be advising them badly! They are also assisted to buy houses and then walk away after 5 years with a good profit margin leaving the chaos behind them! We need to start investing in our own, providing high class training and assisting them to become the future of the island – and before i am accused of being xenophobic just take a look around. I would like to know many senior civil servants are here on licence – and why locals could not be employed and trained up.
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The problem is there is real money and house prices. The only way I can see the situation changing is an economic disaster and nobody wants that!.
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Merlin, totally agree, succession planning, the way to go.
Bit like with the teaching situation, there are local teachers, just stuck in the UK who are prepapred to train up their experience. Guernsey is too picky and wont employ them it seems, yet forgets that succession planning is about training the local work force of local people to take the roles that license holders are given as a temporary measure to bring the skills in.
Somewhere along the lines it has been forgotten what the original purpose of giving a license was for, now it appears to be at the ‘sake’ of a local gaining the much needed experience to step into those shoes.
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