First time buyers being squeezed in UK property market

News in Property Week that first time buyers are finding it increasingly difficult to buy due to the rising cost of renting rings true to a degree in London as well.

Chard' London lettings offices are reporting that rents on affordable flats to let are increasing. One and two bedroom property to let, in particular, is in short supply. Presumably as would be FTBs rent rather than buy. It's pushing prices, and thereby making it harder for them to save for more substantial deposits.

At the same time, sales prices, in prime Central London at least, are holding up very well. Relatively few buyers have difficulty raising large deposits and the buy to let market is very firm as landlords see yields rising on the strength of renewd rental demand.

Bottom line is that people who were buying a year or so ago on the fringes of affordability are now being squeezed out of buying. Whilst some may see this as "unpleasant medicine" for the market, it does mean that banks' (and the London property market's) exposure to an economic downturn is less vulnerable with lower loan to value ratios.