[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Monday, 24 January 2005, 02:16 GMT
The struggle to buy a first home
Couple looking in estate agent's window
Combined salaries still did not allow Dr Alonso-Gonzalez to buy
First time buyers struggling to afford a home are to be offered help under plans being unveiled by Deputy Prime Minister John Prescott.

The news comes after a survey showed first-time buyers were priced out of the market in 92% of UK towns, BBC News spoke to two would-be home owners about their attempts to get on the property ladder.

Lucia Alonso-Gonzalez

Lucia Alonso-Gonzalez is from Spain and works for the University of Cambridge.

I started working in the university in August 2003 and my contract was for three years, but I was expecting to stay three or four years more than that.

We were paying rent of 600 so we thought about buying.

I started going into estate agents to ask how they did things here - with two salaries we were expecting to buy at least a small flat.

When I realised I couldn't find anything close to Cambridge I decided to look at buying something in Spain that I could rent out

We both work in the city and we were looking for something accessible - something we could at least bike to.

But from the beginning we realised that any small flat near the city centre would cost at least 150,000.

But the most we could afford with the mortgages available would be a flat of about 120,000, with rates of about 6%.

Something I found quite strange here was that you don't have fixed rate mortgages - they are fixed for about one year only.

And they only give you three times your salary. On a salary of 35,000 to 40,000 you can't get a mortgage of over 120,000.

To buy a moderately sized house you would need to save 50,000 just to start.

When I realised I couldn't find anything close to Cambridge I decided to look at buying something in Spain that I could rent out.

I really think something needs to be done because in four or five years first time buyers won't be able to buy

It was ten times easier there. Spain has fixed rate mortgages for the whole term.

Most banks offer mortgages which depend on the amount capital you have and the amount you can afford to pay each month.

I'm paying rent here and paying my mortgage with the savings I have each month - and I know if I go back to Spain I'll have a house waiting for me there.

Possible changes

I don't really know that the government should make it easier for people to buy their first home or if it's something that the banks or estate agents could make easier.

I guess I would increase the amount of money they would give for a mortgage to four or five times your annual salary.

I think that the market needs to cool down. Prices need to go down quite a lot so first time buyers can buy something.

And too many people are buying two or three houses. I think maybe tax the second homes or just give some privileges to first time buyers.

I really think something needs to be done because in four or five years first time buyers won't be able to buy and there could be a collapse in the market.

Dean Ayass

Dean Ayass works in financial services and is renting in Brighton.

I live in Brighton where house prices are extremely high.

Both my wife and I work full-time and have fairly decent earnings coming in.

If you've got no-one getting on the ladder at the bottom then the market is going to stagnate

A lot of mortgage advisers want to offer five times your salary, but the maximum you want to go is 3.5 times.

On that, the best you can afford is a studio shoe box flat or something away from your friends and family in an undesirable part of town.

I'm sure a lot of first-time buyers are in a similar situation to us.

If you've got no-one getting on the ladder at the bottom then the market is going to stagnate.

They're willing to lend you a lot more because the rates are very low, because on paper it looks affordable. But I work in financial services and I'm quite aware of the markets.

We're not looking to play the market - we're looking for somewhere we can settle and lay down roots

The government have been very keen to brag about how they've had record low interest rates but they're ignoring the fact that our housing is very unaffordable.

It's been caused by fact that people have been able to borrow four or five times their salary.

If rates creep up then people are going to suddenly realise that they've borrowed a figure that's above their station and that's when repossessions will come in.

We're in a situation where we just rent with a family member - it's cheaper than the market rate and allows us to save up for a deposit.

My intention is that when interest rates rise and houses are repossessed we can go in with a deposit and buy a house at a marked down price.

I married my wife last year. As a family we're planning on children in the near future, so we're looking for a place we can purchase and stay in.

We're not looking to play the market - we're looking for somewhere we can settle and lay down roots.




PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific