Home purchase costs revealed

A homeowner will have to pay over £11,000 in the first year after purchasing a property, it is claimed.

Figures from GE Money Lending have revealed that home purchase costs are equivalent to 30 per cent of a borrower’s annual income in the first year of owning a property.

With essential bills estimated to set an average UK homeowner back £3,500 each year, stamp duty fees also contribute an average of £1,200 while the cost of moving in an equipping a new property is estimated at £4,721.

GE Money Home Lending head of mortgage marketing Gerry Bell commented that consumers need to look beyond the financial burden of “getting on the ladder” and consider the additional expenses involved in purchasing a home.

However, on the finding that prospective borrowers over-budget for these costs by about 30 per cent, he added: “It is reassuring to see that despite rising interest rates and general market turbulence, borrowers appear to have such a realistic outlook.”

Meanwhile, recent financial turmoil in the markets, which has emerged after the US sub-prime mortgage crisis, is believed to stabilised house prices in London for the whole of next year, according to the Royal Institution of Chartered Surveyors as reported by the Times.

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Average house prices approach £200,000

The average price of a house has almost reached the £200,000 mark, according to new figures, but the rate of growth has shown further signs of slowing.

According to the Halifax House Price Index, house prices increase by 0.4 per cent during the month of August, with the average cost now £199,770.

This is the third month out of four that house price inflation has dropped below 0.5 per cent and the Halifax report claims this is indicative of a slowdown in the market.

In addition, the three-monthly rate of growth fell from 4.5 per cent in March to 1.6 per cent in August.

“The downward trend in house price growth is expected to continue over the remainder of 2007 as the five interest rate rises since last summer have an increasing impact on household spending and housing demand,” said chief economist Martin Ellis.

“Sound economic fundamentals, high levels of employment and a shortage in the number of properties available for sale will, however, continue to support house prices.”

The figures also showed that mortgage approvals in the three months to July of this year were nine per cent lower than those recorded during the peak September to November 2006 period.

Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors, said the figures meant speculation of an imminent interest rate cut was “premature”.

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More people renting

The number of people renting in the UK has soared in recent months as house prices continue to rise.

Figures from the Royal Institution of Chartered Surveyors (Rics) show that in the three months leading to January, demand for rented accommodation accelerated at its fastest pace for nine years.

Both flats and houses saw an increase in demand, with houses seeing the greatest change. Rics puts this down to increasing household incomes, which allow people to rent larger properties.

The organisation also points to strong economic activity, good employment conditions and a great deal of migration from eastern Europe as reasons behind the surge in rental applications.

However, it also highlights that concerns over affordability in the mortgage market have had an impact.

“With house prices still rising, the rental market will remain a ‘property purgatory’ for many would-be buyers unless accessibility and affordability conditions improve significantly,” said Jeremy Leaf from Rics.

“However, tenant demand will continue to rise as long as economic conditions remain strong.”

Many people find renting is a great way begin an independent life, however, it is worth considering how much you can afford to spend on rent if you plan on saving up for deposit.

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