Statistics for the third quarter of 2014 from the Council of Mortgage Lenders (CML) demonstrate significant quarterly growth in both house purchases and remortgage activity within Greater London.
According to the data, the amount of loans and borrowing figures in quarter three reached the highest point since 2007. The total of first time buyer loans within London saw an increase of 8% compared to the previous quarter, up 6% from the same period in 2013. The total number of this type of loan reached 13,300, where first time buyers borrowed £3.3 billion – up by 11% quarterly and 16% annually.
Experts from the property industry are viewing these first time buyer figures as encouraging overall.
Director of e.surv chartered surveyors, Richard Sexton, said "A first-home in London comes with a hefty price tag, but that doesn’t seem to be putting off buyers in the capital – the number of first-time buyers increased steadily between the second and third quarters of this year. Global economic uncertainty may be sapping energy from the top of the market, but first-time buyer properties are still in high demand and short supply. Two-thirds of buyers spent more than a quarter of a million pounds on their first home in London."
Peter Rollings, CEO of Marsh and Parsons, also commented, "Despite much talk of a cooling market, the embers are still burning brightly in terms of mortgage activity in the capital. It is particularly encouraging that first-time buyers – the lifeblood of the property market – are still able to find suitable property in London, with both monthly and annual increases reflecting this. The fact first-time buyer loans are now back to pre-recession levels show that potential homeowners are now regaining the confidence and appetite that was damaged by previous economic uncertainty."
The CML report also stated that home mover loans totalled 10,600 in quarter three, which is a surge of 16% from the second quarter. However this figure is down slightly by 1% in comparison to the previous year. That said, the value exceeded the first time buyer market, at a total of £3.7 billion in the quarter. This is a significant increase of 18% on the second quarter and 10% on the same quarter in 2013.
"Vital as those taking their first step on the property ladder are, it is important that those further up the chain are moving too to prevent any bottlenecks and to this end it is heartening that home mover activity also increased in the third quarter." said Mr Rollings.
The final set of data was regarding remortgage lending within London. This type of loan has seemingly declined annually in terms of the number of loans taken out, but have seen slight increases on a quarterly basis. The total number of remortgage loans in quarter three in the capital reached 11,400 – up by 4% on quarter two, but a decrease of 3% on the third quarter of 2013. These loans were valued at a total of £3 billion, which is a more modest increase compared to the other types of loan, at 3% quarterly and 4% compared to the same period last year.
Mr Sexton added a final comment on the overall figures, stating, "The UK mortgage market has been fine-tuned over the last year – with the new regulation arguably unsettling demand and some first-time buyers may have been put off as a result.
"To carry the existing momentum forward, we need much more new housing, and quickly, or we may face creating a capital where only cash-rich buyers can get onto the housing ladder. While wages remain sluggish and interest rates low, saving for a deposit will remain the biggest obstacle blocking the path to homeownership."
Mr Rollings concluded, "While overall London lending is now back to 2007 heights, it is worth noting that figures have remained pretty steadfast throughout 2014 which suggests that the market in the capital is becoming less volatile and more consistent. Having eased first-time buyer problems and in light of reports that those in their 30s and 40s are struggling to obtain mortgages due to the terms encroaching on retirement age, we must ensure that this important demographic doesn’t become the next problem area for the industry."
