House prices: The stagnant market and you

Source: BBC News

The UK housing market has reached a plateau this summer - a situation welcomed by some, but a source of despair for others.

The Nationwide building society says prices have "stagnated", with no change on the latest three-monthly comparison of average property values.Meanwhile, the lack of supply and demand of home loans means that lending in the UK mortgage market is at very low levels.

So how does this affect different groups of people looking to move home, and what can they do to improve their chances of getting the mortgage and home they want? Ray Boulger, of mortgage brokers John Charcol, and Tim Hammond, chief executive of the Homebuyer Centre, give their views.

First-time buyers

A social divide is likely to widen owing to difficulties in securing a mortgage without access to a large deposit, according to Mr Boulger.

He says that young first-time buyers who get financial help from their parents are much more likely to get on the property ladder. More mortgages with a deposit of less than 25% are available now than was the case a year ago, he says, but the bigger the deposit, the more competitive the rates.

He says a rough estimate would show that an extra 5% deposit offered would make a mortgage interest rate 0.5% cheaper. The chink of light for first-time buyers is the fact that prices have stagnated and show few signs of rising quickly in the near future.

This means that there is less pressure on buyers to put in an offer quickly, fearing that the price would keep going up if they delay for a few months. Mr Hammond says that the increasing numbers of properties coming on to the market mean first-time buyers can haggle on prices.

"Take asking prices with a pinch of salt," he says, suggesting that buyers look seriously at two or three properties, rather than setting their heart on one which might be overpriced.

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