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More help for first time buyers?

Chief executive of Worldwide Financial Planning, Peter McGahan speaks about the cost of buying a house

Peter McGahan, chief executive of Worldwide Financial Planning(Image: © Richard Trainor)

The housing market. What is that? For some, it’s a place to try and make money; for large house builders, it’s an economy. In its real and sustainable form, however, it’s a warm, secure home where families are created, laughter shared, pain and heartache talked through, and memories made.

I’m uncomfortable with anything other than the latter as they aren’t real or sustainable. When push comes to shove, the fickle corporate bonuses of the big corporations, or the movement of a house price will mean nothing in comparison to that security of calling that place, your home.

The last time I covered the cost of buying a home in the º£½ÇÊÓÆµ was around six months ago which showed the º£½ÇÊÓÆµ’s affordability to buy a home based on price to disposable income which is an accurate way to look at it. Because house prices are high that doesn’t mean they are unaffordable, because the income might be high to match that.

So, the lower the ratio the better. Belfast is 6.5% and London is 16.3%. Spare a thought for Shanghai at 48.1% and Johannesburg at the other scale of 1.8%.

The ‘market’ has slowed with transactions down around 20% according to Zoopla. House prices will only really fall in synch to someone’s willingness, or need to sell.

There is no need for interest rates to be used to curb inflation. The public aren’t creating it, so higher rates which are slowing the housing market for the normal buyer should return to normal if central banks choose to see the sense.

With higher interest rates, buyers are finding it difficult to see through the fog, which creates ‘worry’ and paralyses decision making. ‘Worry’ is better described as negative imagination. And so, it’s inevitable to see that when the imagination isn’t being used creatively, house buyers develop a ‘wait and see’ response which then creates stagnation of the housing market.

What hasn’t helped is lenders choosing to cut their availability for products for those buyers with low deposits. It has been a tight market for them.