First-time buyers make cautious return to West Midlands housing market

Oct 27 2009 by John Cranage, Birmingham Post

First-time buyers are returning to the housing market in the West Midlands, according to a new survey.

At the same time, investor landlords are turning their backs on flats in favour of houses, RICS, the chartered surveyors organisation, said yesterday.

After members nationally reported a positive net balance in new inquiries – which means more surveyors report an increase rather than a fall in demand – for 11 consecutive months, RICS decided to investigate the trend further.

Questions were asked about the proportion of inquiries from first-time buyers and whether surveyors are now seeing a rise in buy-to-let investment.

Additional questions in the August Housing Market Survey focused on the issue of first-time buyers. Surveyors in the West Midlands reported that ten per cent of new inquiries were from first-time buyers with a net balance of 36 per cent reporting that the number of first-time buyer enquiries had increased over the past three months. This compares with 13 per cent and 28 per cent respectively across the United Kingdom.

Meanwhile, the North West recorded the highest proportion of first-time buyers at 23 per cent, with the lowest proportion recorded in East Anglia at only six per cent. The results of the survey suggest that the net balance of surveyors reporting a rise in first-time buyer demand was most rapid in the South East and East Anglia at 56 per cent and 43 per cent respectively.

In September, surveyors were asked how buy-to-let demand had changed in relation to both houses and flats. The response showed that nationally, a net balance of two per cent more surveyors reported a rise than a fall in buy-to-let enquiries in aggregate.

Some areas faired better with the South West, London and North West among those reporting a higher positive balance. RICS said that interest was generally stronger for houses than flats across much of the country and this was also the case in the West Midlands, where a negative balance of 14 per cent more surveyors reporting higher (rather than lower) demand for houses compared with a negative balance of 50 per cent for flats. The region also reported the most significant drop with a 21 per cent decrease in the number of surveyors reporting a fall rather than rise in overall buy-to-let inquiries.

RICS West Midlands spokesman Richard Franklin, of Franklin Property Consultancy, said: “House-price falls and lower interest rates have gone some way to tempting first-time buyers back into the market. However, buyers still need to have greater deposits to access the market with lenders remaining generally cautious.

“Thus, those buy-to-let investors who, in most instances, have the necessary deposits, are competing strongly with first time buyers as far as entry-level priced houses are concerned.

“This trend could have a marked effect on the West Midland market making this type of stock less likely to return to owner-occupation in the foreseeable future.”