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First-time buyers helping to rebuild Northern Ireland housing market

Renewed confidence in the housing market has turned a generation of renters and 'boomerangs' into first-time buyers. Stephanie Bell hears three purchasers' experiences of getting on the first rung of the property ladder

At the peak of the property boom in 2007, house prices in Northern Ireland sat at nine times the average salary – putting the prospect of owning their own home beyond the reach many and making it an impossible dream for young people in particular.

The chances of getting a mortgage – never mind being able to afford the monthly repayments – were so slim that, for the first time in many years, young singletons and even newlyweds had no chance of buying their own house.

A new generation of young renters sprung up, with house-sharing becoming the norm, and many others having no choice but to stay at home with their parents longer than they would have hoped, or move back in (the so-called 'boomerang generation').

It's been a bleak few years all around, with many of those who did manage to get their foot on the first rung of the property ladder forced into negative equity when the bubble burst, leaving them facing a huge burden of debt.

Thankfully, now, after years of tumbling prices, the tables have turned and the market has finally bottomed-out, encouraging more confidence among buyers and putting prices within the reach of young people once again. The residential property index records show growth in the market of 7% in the second quarter of this year, compared to the same time last year.

The data – compiled by the Northern Ireland Statistics and Research Agency – calculates the average residential property price at £102,000.

With prices now at a more normal four times the average salary, starter homes are easily within reach of the average earner and it is first-time buyers who are coming back in such large numbers that they are now driving the market's recovery.

Those seeking to buy starter homes account for 60% of loans this year, with a typical loan size of just over £70,000 reflecting the recalibrated market.

It is generally agreed among experts that a housing market recovery starts with first-time buyers entering the market and bringing stability to the price of starter homes.

We talked to some young people, who are in the process of getting their foot on the first rung of the property ladder, about why they are taking the plunge, their experiences of the mortgage process and their confidence in the market as a whole.

'It'll be great to get on the property market and have something to show for my work'

Sarah Crowther (31), from Belfast, is an information co-ordinator for Libraries NI and is buying her first home – a semi-detached property at Ballyhackamore in east Belfast. She says:

I have been living at home with my parents, which has been grand as I have a great family, but it has been hard not having my independence.

I left home as a student and then, after university, I backpacked in south-east Asia and Australia for over a year and, when I came home, I didn't want to go back to shared living.

I couldn't afford to rent somewhere, as rents in the area I wanted were around £500, or £600, a month, which was a lot to be paying on my own.

I just knew with the mortgage market at the time I wouldn't be able to get one.

I came back home in 2008 just as the market was starting to slide and, at that time, a lot of my friends, who had bought houses, were sitting in negative equity.

When I left, I could see that houses weren't worth what people were paying and a lot of young people were taking out 100% mortgages without a deposit, which I wasn't prepared to do.

I went to my bank last year to get a personal loan and I was told at the time that I would be eligible to get a mortgage. That got me thinking about buying my own place, as I had never seen it as an option before that.

From that moment, I started to look at property in my area and gauge the costs and what I would be able to afford and what I would get for my money.

I viewed quite a few houses and found one in Ballyhackamore which ticked all the boxes for me, because it had a garden and driveway and the specification I wanted.

I put in an offer below the asking price of £135,000 and there were two other people interested. I couldn't pay over the asking price, so I was over the moon when my final offer, which was the asking price, was accepted.

Going to my bank for the mortgage was a wee bit scary. It was after April, when the new rules had come in and, when it was all explained to me, it really put me off and I didn't feel comfortable and thought that I might actually pull out of buying my own home.

Then a friend recommended First for Finance mortgage advisors on the Ormeau Road. They were brilliant. They talked me through the whole process and we looked at all of my options and the hidden costs, such as stamp duty, conveyancing fees, rates and solicitors fees, and broke it all down to make sure I could afford it.

They dealt with the bank for me and I ended up getting a mortgage with the Halifax. They made it so easy. I don't think I would be in the position I am today without that support I got from them.

My experience with the bank had left me feeling I couldn't afford it and I was out of my depth. I put down a 5% deposit and my mortgage is costing £618 a month. I have a fixed rate for two years, which I can renegotiate.

I have bought in an area where I know my house will go up in value, which will put me in a strong position to renegotiate rates in two years' time.

The bank's survey showed up some damp in the house, though. One thing I would advise first-time buyers to do is get an independent survey done.

It cost me just £40 and allowed me to go back to the vendor and renegotiate on extra fixtures and fittings to cover the cost of repairing the damp problem.

Templeton Robinson have been great. They helped me organise the survey and negotiated the new deal with the vendor.

My estate agent has been absolutely amazing and so supportive, keeping me up to date and doing all the negotiating between me and the vendor.

I hope to get my keys in October and it will be so good to finally have my own place and get on the property ladder and feel that I have something to show for my work.

When you are renting, you are reluctant to paint and redecorate. But with my own house, I can't wait to put my own stamp on it."

'After renting for years it made sense to buy'

Nick Donaldson (25), an IT engineer and Queen's University graduate from Bangor, and his fiancee, Sarah Mason (25), a physiotherapist and graduate of Glasgow University, also from Bangor, are in the process of buying their first home – a semi-detached new-build in Belfast. He says:

We have both been renting in Belfast for a number of years and recently Sarah has gone back home to save some money, as we are getting married next May.

Between us, we would have been paying around £700 in rent and, because of the wedding, it just made more sense to buy and have something to show for our money.

A few years ago, we couldn't have thought about buying. Now prices are down, we feel we are making a good move.

I have a friend who bought when the market had peaked and has now been saddled with negative equity.

We have bought a new-build semi in Victoria Close at £132,000, which will cost us around £600 a month for our mortgage. We looked at other new-builds and compared the prices to make sure we were getting good value for money.

We bought in phase two and now phase three is being released and already prices have gone up, which we're delighted with.

We went to a mortgage advisor, who presented us with a number of options. It was the time when the new rules had come in and they ask a lot more questions, like if you are having friends round for dinner, would you buy steak or chicken and how much do you spend on haircuts?

The mortgage advisor dealt with most of it for us, but it was much more intrusive than I thought it would be.

We got our mortgage through the Ulster Bank. Our completion date has been pushed back a couple of times, because it is a new development and there have been problems with the infrastructure which held things up, and that has been a little frustrating. But we are looking forward to getting our keys the first week in October.

It will be good to have somewhere we can make our own.

'Mortgage advisor was negative, he put me off'

Hannah Brown (24), from Bangor, is a social worker and is buying her first home – a semi in east Belfast. She says:

I've been renting for three years now and, at the start of the year, my dad was keen for me to buy my own house and I started to look at properties in January.

I went to a mortgage advisor to see what options were open to me and he was so negative that he completely put me off.

He told me my repayments would be high at around £700 a month, and who could afford that? I certainly couldn't, so I stopped looking.

I had been renting with a friend and splitting the monthly rent of £560 between us. She was leaving and I didn't want to rent on my own and thought I might as well be putting the money into my own house.

I started to look again at what was available and saw a three-bed terrace at £105,000 which I loved. It just had everything I wanted and was where I wanted to live.

I went to my own bank, the Halifax, and they were brilliant. They approved the mortgage straightaway and the whole process after that was very straightforward.

I was dealing with Dougan Residential estate agents and they, too, were very helpful and made everything very easy for me.

I'm really excited and I feel it is a good time to get on the property ladder, as prices are starting to rise again and it just doesn't make sense to me anymore to be paying rent when I can pay £550 a month on my mortgage and own my own property.

My parents have been very helpful with the deposit and now I'm just looking forward to getting my keys and moving in.

For young people it marks a return to happier times

According to the latest industry report, the first-time buyer market is striding way ahead of any other movers in the property market.

Figures have risen dramatically, with the number of first-buyer mortgages up 75% on 2006. This compares to just 25% for those moving up the property ladder.

Overall, the latest report from the property industry shows that there was 'significant' house purchase and remortgaging activity during the second quarter of this year. Growth was strong, compared to the previous quarter and the same period last year.

First-time buyer loans alone totalled 1,800 in the second quarter in Northern Ireland — 13% up on the previous quarter and 29% up on the second quarter of 2013.

This part of the market saw £150m borrowed — up 25% on the previous quarter and 36% on the same time last year.

There were 1,100 loans made to people moving up the housing ladder during the second quarter, unchanged on the first few months of the year, but up by more than one-fifth on the same period in 2013. Ulster Bank chief economist Richard Ramsey said the figures reveal the greatest number of first-time buyer loans in the second quarter since 2006.

While it points to a return to better times for the young generation, Ramsey says we have still some way to go, as the 1,800 loans made was still less than three-quarters of the level of first-time buyer mortgage activity in the second quarter of 2006, when the market was starting to overheat.

According to Ramsey, the average age of a home-mover now is 40.

“Despite the large 22% yearon- year increase in home-mover activity, it remains at extremely low levels,” he says.

“Over the last 12 months, there were just 4,500 mortgages.

“Apart from the recent downturn, this represents levels last seen in the mid-1970s.”

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