High cost of homes drive talented people away

Aug 14 2008 by Nicholas Craig, The Journal

THE fastest-disappearing breed in the North East is the first-time house buyer. They’re more difficult to spot because so few can now afford to be seen climbing on to the property ladder.

Only a minority can muster a deposit of any size, and even fewer can manage the 25% now demanded by many banks and building societies.

In Newcastle, the mass buying of first-time homes a few years ago by buy-to-let landlords has pushed up prices well beyond the means of most young graduates.

House prices may now be stabilising, but the prices are still well above the means of many talented people we need to stay in the region.

It’s almost impossible to get a house in Newcastle for less than £100,000.

How on earth can someone on a salary of around £15,000 afford that?

Having fewer first-time buyers in the area has a direct effect on local business and new investment.

We need to encourage highly trained young people to establish roots in the region.

University numbers are booming and there is still a range of attractive jobs in the North East.

However, without an affordable place to stay, many are going to go back to the family home, wherever that may be.

New graduates have the double whammy of student debt and spiralling mortgage/rent figures. According to Nationwide, the average age of a first-time buyer is about 40.

The alternative answer may be to give up the idea of university altogether and instead consider an apprenticeship.

It will mean any debt is smaller to begin with, although the problem of finding a deposit and a mortgage remains.

It seems a stark choice, but financially it may be the only way to afford a mortgage before middle age. Renting a property is still seen as a transitional stage and is not much cheaper than a mortgage.

If the current credit crunch dissuades the next generation of graduates from staying here, then regional businesses could as a result become more parochial, with fewer entrepreneurs and innovative companies starting up.

We could do with some fresh ideas pretty quickly to keep the lively mix of talented young people, new businesses and affordable housing on track in the North East.