Low mortgage rates
Giving independence to the Bank of England was a smart move on the part of the Chancellor and brought about the lowest mortgage rates in a generation. The average mortgage rate over the last ten years was 5.9 per cent compared to the 8.8 per cent average of the pre-Blair decade.
House prices boom
The UK saw a 189 per cent rise in house prices between May 1997 and May 2007 as a result of Labours low inflation, low interest rate economy. This took the average house price from £68,000 in May 1997 to the £197,000 we saw in May of this year.
Mortgage borrowing has soared
Today the average homebuyer borrows around £125,000 to buy a house, a sharp increase from the £47,000 average of May 1997 leaving many Brits with the trail of debt following in their wake.
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Housing equity heats up
Mortgage borrowing might have gone through the roof, but housing equity has followed. Most homeowners have subsequently seen the wealth contained in their home grow from £29,000 to a massive £103,000 a 254 per cent increase.
Mortgage mountain grows
When Blair was given the keys to Number 10 the stock of outstanding mortgages in the UK was £420billion. Since then it has risen by 162 per cent to hit a staggering £1.2trillion today.
First-timers fall
First-time buyers made up a key section of the market in May 1997, accounting for 45 per cent of all mortgage borrowing. However ten years on, first-timers only make up just over a third of the borrowing big picture. Affordability is also a huge issue for those trying to leap up onto the housing ladder and first-time buyers now borrow an average of 3.3x their income in order to secure their dream property, compared to the 2.3x of ten years ago.
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Stamp duty
Stamp duty has been a major earner for the Treasury whilst Tony Blair has been in power, with the introduction of new stamp duty bands and the speed at which housing values are increasing. In the year before Labour came to power, stamp duty brought £675million into the HM Treasury, by 2006 it had £6.3billion and is still rising today.
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The overall cost of moving home has risen by over £6,500 in the past decade, from £2,927 in 1997 to £9,486 today. As part of these costs, stamp duty per transaction rose from just £543 to a staggering £5,009, however by contrast the average household income only rose by 43 per cent.
Boom in buy-to-let
Investment properties emerged as a new industry over the past ten years as a result of demographic changes, rising student numbers, high immigration and the constraints of ever increasing house prices. Social housing provision within this timeframe remained static so private landlords moved into the market to plug the gap and reap the rewards. The private rental sector now makes up a huge 12 per cent of total housing stock, with the level of owner-occupiers beginning to fall for the first time in two generations.
Housing market remains unreformed
One of the things the Labour government has failed to do over the past decade is simplify and speed up the process of buying a home in England and Wales. Home Information Packs have been a thorn in their side, with repeated dilution and delay until the final embarrassing hiccup just ten days before they were due to be introduced on 1 June 2007. They have now been pushed back until 1 August 2007 with general unrest within the industry as to whether they will ever come to fruition.
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Warren Bright, chief executive of propertyfinder.com, said: The housing market has been extraordinarily energetic during the Blair years. Homeowners and property investors have seen the value of their homes rise hugely, and have enjoyed an even bigger boost in the equity in their properties.
Unfortunately one of the side effects has been the increasing gap between the housing haves and have-nots with the bottom rungs on the housing ladder moving out of reach of many. We estimate that 3.1m people who had expected to retire in their own home will live out their golden years in rented accommodation. Although homeowners have done well, the Treasury has been by far the biggest winner as the tenfold growth in stamp duty has far outstripped the rise in house prices.
For the Brown years, we hope to see firm action to tackle the shortage of housing supply. This will mean a commitment to building far more new homes to meet the housing needs of our growing population.
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