Blair’s legacy includes fewer FTBs, says Propertyfinder.com

As Blair prepares to move out of Downing Street, Propertyfinder.com says his housing market legacy includes lowering mortgage rates but also a decline in first-time buyer numbers.

The website says granting independence to the Bank of England brought the lowest mortgage rates in a generation, with an average rate during the Blair years off 5.9% compared to 8.8% for the 10 years before him.

It says Labour’s low inflation, low interest rate economy saw the average house price rise from £68,000 in May 1997 to £197,000 at the end of Blair’s premiership.

Mortgage borrowing also soared, as a typical home buyer borrowed £47,000 when Blair took office compared to £125,000 when he left.

Over the same period, the average home owner saw their equity grow by 254% and the stock of outstanding mortgages rose 162%.

First-time buyer numbers have shrunk from 45% of mortgage borrowers in 1997 to just over a third in 2007 and affordability has been stretched with the typical first-time buyer now borrowing 3.3x income compared to just 2.3x 10 years ago.

Propertyfinder.com says the introduction of Stamp Duty bands and the speed with which house values rapidly moved up into the new bands made it a major earner for the Treasury as receipts grew from £675m to £6.3bn.

The overall cost of moving home for the average home buyer rose from £2,927 in the year before the Blair removal van arrived in Downing Street to £9,486 today, but by contrast, the average household income rose just 43%.

Propertyfinder.com says Blair era also saw the birth of the buy-to-let sector as demographic change, rising student numbers, high immigration, and rising affordability constraints led to an explosion in demand for rented housing.

But social housing provision has remained static and the level of owner occupation is beginning to fall for the first time in two generations.

Propertyfinder.com also says Blair’s government has failed to simplify and speed up the notoriously awkward process of buying a home.

Warren Bright, chief executive of propertyfinder.com, says: “The housing market has been extraordinarily energetic during the Blair years.

“Home owners and property investors have seen the value of their homes rise hugely, and have enjoyed an even bigger boost in the equity in their properties.

“Unfortunately one of the side effects has been the increasing gap between the housing haves and have-nots with the bottom rungs on the housing ladder moving out of reach of many.

“We estimate that 3.1 million people who had expected to retire in their own home will live out their golden years in rented accommodation.

“Although home owners have done well, the Treasury has been by far the biggest winner as the tenfold growth in stamp duty has far outstripped the rise in house prices.

“For the Brown years, we hope to see firm action to tackle the shortage of housing supply.

“This will mean a commitment to building far more new homes to meet the housing needs of our growing population.”