Mortgages for first-time buyers are proving more and more difficult as the worldwide financial sector continues to consolidate after what many describe as the worst economic downturn in living history. Despite the fact that the UK economy, as one example, now appears to be moving forward at a relatively quick pace, the impact on bank balance sheets will be felt for some time to come. This is having a major impact upon mortgages for first-time buyers and it will be interesting to see what kind of assistance is made available around the world.
The truth is that first-time buyers are the lifeblood of any property market because they allow people to upsize and downsize at their leisure. The introduction of new blood to the sector is always welcome and with the financial sector still under pressure it is now up to governments to come forward with financial support incentives.
Help to Buy scheme
The Help to Buy scheme in the UK has attracted very different opinions from all areas of the property sector, politics and investment arena. The truth is that by guaranteeing a percentage of a property buyers mortgage this gives financial institutions more headroom to come on board and agree a long-term arrangement with prospective buyers. There is no doubt that the scheme has certainly encouraged more buying of real estate in the UK but what will happen when the scheme comes to end?
Quote from PropertyForum.com : “While it will come as no surprise to learn that Edinburgh is one of the most active and most popular property markets in Scotland, many people may be surprised to learn it is among the top 12 property hotspots in the world.”
Those who have expertise in the property sector believe that by the time the Help to Buy scheme comes to end the UK property market will be able to stand on its own 2 feet. There are few people who doubt this particular outcome but the fact is that by the time the scheme does end we could see property prices well out of the reach of future first-time buyers. This financial assistance available today could effectively price first-time buyers out of the market in years to come.
Financial schemes elsewhere
At this moment in time there are few governments around the world who can readily finance such a scheme as that announced by the UK government. However, there is no doubt that the likes of Spain and Portugal will look to add their own financial support to local property markets in due course. At this moment in time the likes of Spain, Portugal and Cyprus have decided to use residency visas as a means of attracting overseas interest in their real estate sectors. This is just another type of incentive which is certainly catching the eye of investors from places such as China.
As we have mentioned time and time again, the worldwide property sector is a major element of the eventual worldwide economic recovery. There is so much money invested in property around the world, through investors, homeowners and banks that quite literally the property sector, both internationally and locally, will need to recover before any general economic improvement.
While various governments around the world have introduced an array of incentives to assist both overseas property investors and first-time real estate buyers, the fact is there could be trouble ahead in the future. This ongoing support has prompted a recovery in some worldwide property markets which then allows the local economy to recover and push forward. Whether this short-term support is storing up long-term problems, with property prices moving too far ahead for future first-time buyers, remains to be seen.