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Agent Attacks Cambridge Findings

LONDON-International agency FPD Savills has hit out at findings released by researcher Cambridge Econometrics which says that first time home buyers are facing big problems because of their high mortgage commitments.

By Steve Killick | Updated on August 22, 2001

LONDON-Property consultancy FPD Savills has said that findings by Cambridge Econometrics are fundamentally flawed. The Cambridge report asked if first time buyers of residential property are over exposed to a potential re-correction in house prices. Should their be a downturn in the market the Cambridge thesis said that many could once again face the problem endured by so many during the early 1990s, namely negative equity.

Richard Donnell, director of research at FPD Savills, said, ‘First time buyers are much older than they used to be. It would take a 1980s-style recession to push them into negative equity and first time buyers are not as exposed as they were a decade ago.’ The average age of the first time buyer is currently 32, much higher than the average age in the late 1980s. Consequently, first time buyers have more equity to put down when buying a property. According to Government statistics the average first time buyer has an 80% mortgage and less in Greater London, which averages 77%. ‘These levels of gearing are much lower than was the case in the late 1980s which means that first time buyers are in generally better financial shape,’ said Donnell.

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