Page last updated at 00:04 GMT, Tuesday, 24 February 2009

First-time buyers still struggling

By Andy Verity
Propertywatch, BBC Two

Louise and Seb have struggled to raise the deposit needed to secure a mortgage

If you listen to estate agents and surveyors and believe what they say about the housing market, they have some interesting news:

The frozen housing market is thawing and buyers are coming back into the market.

Both the estate agency Hamptons and the Royal Institution of Chartered Surveyors say they are seeing a growing army of buyers not only staring through their shop windows but also viewing properties and making offers.

Before you point out the rather strong vested interest both these sources have in pointing to any positive aspect of the housing market whatsoever, and before you make a sarky reference to the phrase "green shoots", pause for a second.

There are reasons why it makes sense for buyers to come back into the market.

As always there are plenty of people whose lives are changing - they are growing up, getting married, having babies, getting divorced. And when their personal circumstances change that creates demand for new homes.

Many people in that situation have been waiting for months or years prices to come down to earth. That means pent-up demand for whatever comes on to the market.

Houses are cheaper than they have been in four years. And mortgages are cheaper, perhaps cheaper than they have ever been.

You can borrow at a mind-boggling 2.3% if you have a big enough deposit. In theory, that pent-up demand could now be released.

Buyers emerge

But who is actually buying? You might expect it to be those frustrated first-time buyers, encouraged by those falling prices and cheap mortgages.

Louise Aiken
There was no other option but to stay put
Louise Aiken

People like Louise Aiken and her husband Seb.

We came across Louise as we researched a landmark new series for BBC Two, Property Watch, coming up in the spring.

She works as a marketing manager, while her husband is in luxury clothing in the west end of London.

"We have always dreamed of owning our own place. With prices falling we thought it would be a great time to buy," she says.

Louise narrowly escaped redundancy last year and with a baby due in April, her new family needs a settled home.

A two-bed flat on the ground floor would do, somewhere commutable - perhaps Tooting in southwest London. She and Seb have no debts.

Staying put

Aren't they the ideal customers for our lenders - a committed, hardworking, creditworthy family?

They have saved for a deposit. But here's the problem: for all their work they can't manage to raise 10%.

And without that, the cheapest mortgages simply aren't coming their way.

Price falls or no price falls, they cannot get the deal they want for the property they need. After numerous viewings, and with time running out, they have decided to keep renting.

"It was proving very difficult to secure the finance and find anything suitable," she says.

"Our landlord offered to redecorate our bedroom and make improvements in time for the baby's arrival. There was no other option but to stay put."

If the housing market was working, cheaper prices and bargain basement mortgages should be drawing first-time buyers back to the market.

The estate agents aren't making it up. But whoever these new buyers are, they aren't the likes of Louise.

Propertywatch, a new series on property prices and the downturn, will be broadcast from 11-14 May at 2000 BST on BBC Two.

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