First Time Buyers
Struggling to get on the Housing Ladder

I have a great deal of sympathy with the plight of many locally who are now faced with rising house prices. Whilst those already on the housing ladder sit back and watch their capital grow, for those first time buyers who face starting prices of about £100,000. I was in a smilar position in the last house price boom in the late 80's and 90's. Even with 2 incomes it was almost impossible to find a house within our price range.

The problem is there is little a government can do in the short term to help individuals. The house price rises have impacted on the governments plans for public services so I welcome the Starter Homes Initaitive which will help key government workers find homes in the most expensive areas. There are other schemes available with Housing Associations for those who wish to enter the housing market - such as shared rent/mortgage schemes.

So why are house prices rising so fast. Generally it is a case of supply and demand. The economy is doing well - we have avoided the world recession and unemployment is falling. Combining this with the lowest interest rates for 40 years and a growing number of people wanting to buy, with housing in short supply in many areas we have a recipe for the market to be overheating.

The government needs to take the heat out of the boom so that prices do not come to a crash. However, the market will also have to correct itself. It is obvious that at some stage, and we have probably raeched that level now, prices at the bottom rise so far that first time buyers can't get on the ladder. This leads to oversupply against demand and a readjustment will take place. It happened too fast in the 1990s and for many like me who stretched themselves we found ourselves in negative equity. Under the Tories millions were in negative equity and thousands lost their homes as unemployment rose again.

The other things the government are doing are trying to manage that process. Stamp Duty at the top end of the market should dampen demand and allowing further house building and regeneration especially on brownfield site like those in Loughborough, should match supply and demand. In Loughborough the Local Plan being adopted and sites being released should ease the burden.

However, in the short term it looks difficult for first time buyers, and I can sympathise having gone through the same experince, but it would be wrong to suggest there is a magic wand to wave over this issue.