800,000 missing out on home ownership, estimates CML

27 October 2009 | By Natalie Thomas

The trade body calculates that as many as 800,000 households that might have expected to become home owners between 2007 and 2010 may be frustrated in trying to do so.

The CML says that this could have a knock-on effect on the size of housing market for many years to come.

The total number of first-time buyers fell to 194,000 in 2008, compared with 357,000 in 2007.

But the CML says purchases by first-time buyers could be restored to more normal rates if funding channels for mortgages were unblocked. 

Together with the rising number of young people, the best case scenario is that next year the annual number of first-time buyers climbs above the 500,000 mark.

Yet the trade body argues that although there is a possibility that pent-up demand among first-time buyers is building up, the likely outcome is a slow and steady recovery to first-time buyers numbers rather than a quick return to more normal market conditions.

A spokesman for the CML says: “What we may have seen in recent years is a transition from a market in which one form of affordability constraint for first-time buyers – the price of housing relative to income – has been replaced by another: a shortage of mortgage funding, which has been rationed by the requirement to put down larger deposits.

“Clearly, the confidence of buyers – and perhaps in particular first-time buyers – will have taken a knock. 

“But there is no evidence at this stage of a long-term shift in the desire to be a home owner. 

“Instead, we are likely to see a slow recovery in the housing market – as the economy, consumer confidence and the availability of mortgage finance slowly improve.”

If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat