YOUNG couples in the Isle of Man may have to wait for as long as 20 years before they can get onto the property ladder, unless the government steps in to give some assistance during the current economic crisis.
That is the view of Black Grace Cowley Limited director Mark Grace who has proposed that the Manx government “acts now” to assist first-time buyers kick-start the property market.
“There are many reasons to look to kick start the market and, without doubt, the best way is through helping from the ground up,” he said.
He has suggested that the Isle of Man should look closely at a scheme in the UK which has injected £250 million to allow 10,000 first-time buyers to become eligible for the ‘Firstbuy’ scheme announced by Chancellor George Osborne. The UK scheme will be funded by a levy on banks.
Mark Grace said, “Apart from the resentment that a whole generation of young people will feel at being shut out of the home owning market, a stable housing market requires people at the bottom of the ladder to be able to buy so that those higher up can move on to a larger family size home.
“The average age of a first time buyer, without a family or state assistance, rose to 37 years from 33 years in 2007 and today’s 21 year olds may have to wait until they are 43 before making a purchase according to the National Housing Federation.
“No-one is suggesting first time buyers seek to over-extend themselves, recreating the same problems that caused the current credit crisis, and sufficient safeguards must be in place to avoid repeating the mistakes of the past.”
He added, “We haven’t seen house values collapsing in the Isle of Man. However, the market has become static with far fewer transactions taking place, and the main losers, again, being the first time buyers, many of whom who are unable to put together the necessary deposits to secure a mortgage.
“Just as in the UK, a lack of activity in the property market has repercussions for many of us - construction of new properties reduces, creating job losses, affecting suppliers, retail suppliers of household goods, and subsequent drops in spending and economic activities.”
Mark Grace said that the existing help for first time buyers is “too limited”, and a more wide ranging scheme is needed, maybe lasting up to five years whilst the banks recapitalise their balance sheets and regain an appetite for lending to this sector.
He added, “There are a number of ways the Isle of Man Government can assist, with one recent suggestion mooted that would involve a Government Savings Bond aimed at the retired market, who themselves have struggled with low interest rates for a number of years now, to raise capital which can then fund first time buyer mortgages.
“Effectively, it could be neutral from a cost point of view as far as government is concerned, and provide some much needed assistance to both retired savers and first time borrowers.
“In fact, first time buyers have every reason to be pretty cheesed off. The financial crisis forced every major UK mortgage provider to stop making loans for 100% of a home’s value by April 2008.
“Concerned by further falls in house prices and a perceived higher risk associated with first time buyers, they also raised the typical down payment to as much 25%, regardless of a purchaser’s ability to meet monthly payments.
It’s never an ideal time to ask for Government intervention and money. However, like the UK Government, the Manx Government should act now to assist those trying to get onto the ladder.”
