UK First Time Buyers Stay At Home In July

By Stewart Douglas

The number of first time home buyers in the UK fell sharply over the course of July, according to a report released today. 

The figures out today, released by the Royal Institution of Chartered Surveyors, showed the fastest decline in first-time buyers for over three years. 

Simultaneously, the number of properties remaining unsold throughout July was also up, reflecting a turn away from buying property. 

The report attributed much of the drop to rising interest rates, currently at 5.75%.  Given the impact of central interest rates on the price of borrowing against a variable mortgage, it is thought that the higher rates of recent months have been sufficient to put off first time buyers. 

With five interest rate rises since the start of the year, many homeowners and potential first time buyers have responded to the squeeze in income, reflected both in new home enquiries and national inflation figures. 

The Bank of England had been widely expected to increase interest rates to 6.00% and beyond over the second half of this year, to help further maintain inflation within its target 2% threshold. 

Further, intimation to that effect in last week’s Quarterly Inflation Report by the Bank of England led many analysts to consider another rise ‘a certainty’ before the end of 2007. 

However, off the back of today’s figures, and statistics showing a surprise fall in inflation to below government targets, many now feel that a further interest rate rise could no longer factor in the short term strategy of the Bank of England. 

The news comes just 24 hours after a study into house prices revealed the average cost of a home had risen by 12.1% through the year on June, taking the figure up to £214,222, from £210,793 on May.