With Help to Buy never far from the headlines, this quarter Countrywide plc looks at where those buying through the scheme come from and the types of mortgage products they’re using. Countrywide plc’s Q2 2014 Quarterly Market Review also looks at the number of homes built across Europe over the last decade, the impact of the £500,000 loan to income cap introduced by major banks and how rising house prices are driving first time buyers to cheaper areas of the country.

1. Quarterly Market Review
Summer 2014
A decade of housebuilding in Europe
Banks tighten lending criteria
The art of compromise
4
2

2. 4/5 www.countrywide.co.uk
COUNTRYWIDE QUARTERLY MARKET REVIEW Q2 2014
ContentsWith Help to Buy never far from the headlines, this quarter Countrywide plc
looks at where those buying through the scheme come from and the types
of mortgage products they’re using.
Countrywide plc’s Q2 2014 Quarterly Market Review also looks at the
number of homes built across Europe over the last decade, the impact of
the £500,000 loan to income cap introduced by major banks and how rising
house prices are driving first time buyers to cheaper areas of the country.
Countrywide plc is the UK’s largest property services group, operating the
UK’s largest estate agency and lettings network of circa 1,300 branches
under 52 high street brands. The group has a wide reaching scale with
branches in locations from Stirling to Penzance.
Countrywide plc sells 1 in 11 houses in the UK and is the third largest
mortgage distributor in the UK with just below a10% share of the intermediary
mortgage market. The Group is also the UK’s largest transactional
conveyancing business by completions, the UK’s largest land and new
homes agency and a leading provider of residential valuations and surveys,
accounting for circa 30% of all residential mortgage valuations in the UK.
As the UK’s largest integrated residential and commercial property services
group, Countrywide plc has a unique perspective on the UK property market
and is truly countrywide.
_ 04 | Countrywide plc’s market barometer
_ 06 | Who’s using Help to Buy?
_ 08 | Five slide story of the market
_ 10 | A decade of housebuilding in Europe
_ 12 | Banks tighten lending criteria
_ 14 | The art of compromise
ABOUT COUNTRYWIDE PLC:
Countrywide plc, the UK’s largest integrated property services Group, including the largest estate
agency and lettings network, operates more than 1,300 associated branches across the UK.
Countrywide plc’s network of expertise helps more people move than any other business in the UK
and is a leading provider of estate agency, lettings, mortgage services, land and new homes, auctions,
surveying, conveyancing, corporate property management services and commercial property.
Countrywide plc’s award-winning service has earned the business over 150 high-profile industry awards
in the last five years, with customers voting Countrywide Best Large Chain National category, at the
2013 ESTA awards. Our Land & New Homes team was named the UK’s Best New Homes Agent for two
consecutive years at the Estate Agency of the Year Awards 2012 and 2013 and Countrywide Surveying
Services won the award for Best Anti-Fraud Measure at the Mortgage Finance Gazette Awards 2013.
COUNTRYWIDE QUARTERLY MARKET REVIEW Q2 2014

3. 4/5
COUNTRYWIDE QUARTERLY MARKET REVIEW Q2 2014
Market barometer:
A question of supply and demand
The Countrywide barometer is based on supply and demand information
generated from Countrywide plc’s circa 1,300 estate agency and letting branches.
It provides a solid indicator of current market activity and future sentiment.
BUYERS TO SELLERS AND TENANTS TO LANDLORDS
15
12
9
6
3
0
NUMBEROFBUYERSTO
EACHNEWSELLER
Q2 2014 saw a degree of cooling in the
housing market although there are still
far more buyers and far fewer properties
available than 12 months ago.
The increase in demand in the first
quarter of the year led to large price
rises across the South of England.
While it may have taken some time,
Countrywide plc is now beginning
to see a larger number of people
looking to sell, a trend which has
begun to alleviate some of the
upward pressure on house prices.
Demand in the rental sector,
alongside growth in rents, has
remained strongest across the south
of the UK. Economic growth has seen
jobs created at the fastest rate for
four decades, with demand for rental
accommodation highest in areas
where large numbers of jobs have
been filled by relocating professionals
from across the UK or Europe.
BUYERS TO
EACH NEW
SELLER
9.9
Q2 2014
PROSPECTIVE
TENANTS PER
NEW PROPERTY
6.5
Q2 2014
2008|Q4
2008|Q1
2008|Q2
2008|Q3
2008|Q4
2009|Q1
2009|Q2
2009|Q3
2009|Q4
2010|Q1
2010|Q2
2010|Q3
2010|Q4
2011|Q1
2011|Q2
2011|Q3
2011|Q4
2012|Q1
2012|Q2
2012|Q3
2012|Q4
2013|Q1
2013|Q2
2013|Q3
2013|Q4
2014|Q1
2014|Q2
2008|Q1
2008|Q2
2008|Q3
2009|Q1
2009|Q2
2009|Q3
2009|Q4
2010|Q1
2010|Q2
2010|Q3
2010|Q4
2011|Q1
2011|Q2
2011|Q3
2011|Q4
2012|Q1
2012|Q2
2012|Q3
2012|Q4
2013|Q1
2013|Q2
2013|Q3
2013|Q4
2014|Q1
2014|Q2
4.0
3.9
Sale
Rental
7.7
4.9
7.2
6.5
3.2
6.4
4.1
6.3
4.4
6.6
7.5
7.6
6.6
6.6
6.7
6.5
7.1
7.1
7.0
7.5
8.4
8.1
7.2
6.1
7.3
8.5
8.5
8.6
9.1
6.8
6.5
6.3
6.1
6.4
9.9
6.5
9.7
12.3
6.8
6.3
6.3
6.1
5.8
5.4
5.6
5.9
6.5
5.3
5.0
6.6

4. 6/7 www.countrywide.co.uk
COUNTRYWIDE QUARTERLY MARKET REVIEW
hile government data shows that
around 80% of purchasers using
the Help to Buy scheme are first
time buyers, little more is known about
their path onto the housing ladder. First
time buyers come in many shapes and
sizes, and buyers using the Help to Buy
scheme are no different. They represent
a healthy cross section of those struggling
to get onto the housing ladder today.
Countrywide plc data shows the largest
group of purchasers has come from the
private rented sector. 55% of people
who have bought a house using Help to
Buy have come from the private rented
sector, higher than the average among
first time buyers in general. This figure
rises to 65% in London where the sector
forms a larger proportion of households.
The private rented sector is diverse and
houses a wide range of people. While
the income of the average buyer moving
from privately rented accommodation is
£41,000, over a third of renter house-
holds earn less than £30,000. There
has been a particular bias towards lower
income renters in London and the South
East where 40% of those renters using
the scheme earn under £30,000.
Those living with family (30%) form the
other central part of demand. These are
households unable to access the private
rented sector due to the cost of rent, or
are unwilling to do so due to a desire
to save more quickly for a deposit. As a
consequence, they tend to be younger
than average, earning 16% less than
those living in the private rented sector.
Half of these are single person house-
holds, which might be expected given
their early life stage, but means housing
costs take up a larger proportion of their
income. In the majority of cases these
W
Who’s using Help to Buy?
Q2 2014
choose from. Before the start of the Help
to Buy Mortgage Guarantee scheme there
were around 50 95% loan-to-value mort-
gage products, compared to 200 today.
Just over half are backed by the scheme,
with a growing number of mortgages of-
fered independently – a sign that lenders
can operate effectively in a post Help to
Buy market. Given the qualifying criteria of
the scheme - a 5% deposit - the lend-
ing profiles are similar. The difference in
interest rates offered by lenders using the
two parts of the scheme is reflective of the
lending profile of the two schemes and the
risk perceived by lenders. While buyers
using the Equity Loan element in effect
have a 25% deposit, under the terms of
the Mortgage Guarantee lenders pay the
government 0.9% of the loan amount to
guarantee the mortgage for 7 years, the
cost to borrowers therefore is higher.
With similar lending profiles, any change
in interest rates will have a similar effect
on the mortgage repayments of the
majority of people buying through the
scheme (65% of buyers using each part
of the scheme borrow at a rate within
a 0.5% range). The average household
using the Help to Buy scheme spends
29% of their take home pay on mort-
gage repayments - those using the
Mortgage Guarantee are paying a slightly
higher proportion despite higher aver-
age incomes. By way of comparison, the
average first time buyer purchasing inde-
pendently of the scheme in 2014 spends
a quarter of their take home income on
mortgage payments. With only a 5% de-
posit, the mortgage repayments of those
using the Help to Buy Mortgage Guar-
antee scheme are clearly higher than
those able to put down a larger deposit,
meaning a higher income is needed to
make repayments affordable.
With the Bank of England hinting inter-
est rates will rise as the recovery takes
hold, the impact will be felt by millions
of mortgage holders. While 95% of Help
to Buy backed mortgages are on a fixed
rate for two years or longer, the impact of
a rate rise will eventually be felt. A 2.5%
rate rise would see the average house-
hold spend 36% of their take home pay
on repayments, up from 29% – but still
Help to Buy is enabling a growing number of households
to realise their aspirations of homeownership
are new households which were wait-
ing to form – saving for a deposit while
paying reduced or no rent.
While the use of the scheme by existing
homeowners is perhaps less politically
acceptable, the scheme has provided a
lifeline to many homeowners in parts of
Northern England where falling house
prices have eroded the equity held by
many homeowners. For first time buyers
in parts of Northern England who bought
in 2006 or 2007, Help to Buy has helped
households move after negative equity
has prevented many from moving. In the
North East almost 30% of homes bought
through the scheme have been pur-
chased by existing home owners.
Households using the Help to Buy scheme
have enjoyed an increasing number of
high loan to value mortgage products to
Average
proportion of take
home pay spent
on mortgage
repayments
well within what is deemed affordable by
lenders. With most lenders introducing
the stress tests required by the Mortgage
Market Review prior to its formal intro-
duction, the majority of borrowers using
the Help to Buy scheme have already
proved they are able to comfortably
afford a rise in interest rates.
Fears that the Help to Buy scheme
would allow households to borrow
money which they couldn’t repay to buy
houses they couldn’t afford have been
waylaid. Mortgage repayments remain
no less affordable than to the average
first time buyer and new owners look
well placed to ride out any rise in interest
rates. Buyers have almost exclusively
come from groups which are beginning
to receive considerable political atten-
tion given their rapid growth, as rates of
home ownership among the young have
gone into reverse.
With a General Election looming, Help to
Buy seems likely to feature prominent-
ly on the political agenda. While there
has been criticism of the scheme from
a number of political commentators,
among aspiring homeowners which form
an increasingly large sector of the elec-
torate, Help to Buy remains a remarkably
popular policy.
EQUITY LOAN
MORTGAGE GUARANTEE
Source: Countrywide plc 2014
Given that the scheme
is funded by the
Government, it is
important that those
using it would otherwise
find it difficult to buy
unassisted. So far this
has been the case,
with the majority of
purchasers coming
from the private rented
sector or the parental
home with below
average incomes
At current rates
2.5% rise in interest rates
28%
30%
34%
37%
Lending profile of
the Help to Buy Schemes Help to Buy
Mortgage Guarantee
Source: Countrywide plc 2014
40%
35%
30%
25%
20%
15%
10%
5%
0%
2.8%
2.9%
3.0%
3.1%
3.2%
3.3%
3.4%
3.5%
3.6%
3.7%
3.8%
3.9%
4.0%
4.1%
4.2%
4.3%
4.5%
4.7%
4.4%
4.6%
4.8%
4.9%
5.0%
5.1%
5.2%
5.3%
5.7%
5.6%
5.4%
5.5%
AVERAGE
APR
3.3%
AVERAGE
APR
5.2%
Profile of those using the
Help to Buy scheme
Source: Countrywide plc 2014
Tenant
Living with
family
Current owner
55%Tenants
Average household income: £41,000
Older households (40+): 18%
Low income households (<£30k): 33%
30%Living With Family
Average household income: £35,500
Older households (40+): 4%
Low income households (<£30k): 51%
15%Current owner
Average household income: £50,000
Older households (40+): 13%
Low income households (<£30k): 12%
Help to Buy
Equity Loan

5. 8/9 www.countrywide.co.uk
COUNTRYWIDE QUARTERLY MARKET REVIEW Q2 2014
All you need to know about the housing
market in five simple charts
The five slide story of the market
With stock at a premium, the
number of newly registered
buyers gives an indication of
changes in demand. In Q2
2014 the number of registered
buyers was 34% higher in
comparison to Q2 2013 -
the largest jump in six years.
There are signs however that
this surge in demand is gently
beginning to cool. Between
June 2013 and June 2014 the
number of buyers registering
rose 26%, which while a
considerable rise, it does
represent a slowdown in the
rate of growth.
In 2013, price rises in London
were driven by a shortage of
available stock. However there
are strong signs that this is
beginning to change in 2014.
Outside London, the first half
of 2014 has seen levels of
supply remain tight.
1
2
Growth in registering buyers
Year on year change in number
of properties on the market
The number of viewings
taken to agree a sale is
highly seasonal. The first
few months of the year
are traditionally associated
with new buyers entering
the market. New, would-
be buyers tend to view a
larger number of properties
before purchasing. With
fewer properties on the
market alongside a growing
number of buyers, a fall
in the number of viewings
required to agree a sale
represents evidence of
buyers increasingly willing
to compromise.
The rise in the proportion
of asking price achieved
is an indicator of future
market sentiment rather
than one of market strength.
Over the last 12 months,
the difference between
asking and achieved price
narrowed by 1.1% to 98.6%.
In a rising market sellers will
generally raise asking prices.
If buyers are willing to meet
these prices, the differential
between asking and
achieved price will narrow.
If however, asking prices rise
faster than what buyers are
willing to pay, the proportion
of asking price achieved will
begin to fall.
5
4
Market
Appraisals
Viewings to agree a sale
Percentage of asking
price achieved
While the number of properties
available for sale across much
of London and the South East
remains down year on year, there
are signs that this is changing.
Rising house prices are driving a
raft of new sellers onto the market.
Countrywide plc carried out 24%
more market appraisals in June 2014
in comparison to June 2013.
3
Jan|12
Feb|12
Mar|12
Apr|12
May|12
Jun|12
Jul|12
Aug|12
Sep|12
Oct|12
Nov|12
Dec|12
Jan|13
Feb|13
Mar|13
Apr|13
May|13
Jun|13
Jul|13
Aug|13
Sep|13
Oct|13
Nov|13
Dec|13
Jan|14
Feb|14
Mar|14
Apr|14
May|14
Jun|14
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
LONDON
SOUTH
MIDLANDS
NORTH
Q22014-Q22013JUNE2014-JUNE2013
92%
93%
94%
95%
96%
97%
98%
99%
100%
101%
102%
103%
2013
2014
40%
30%
20%
10%
0%
North
West
South
EastLondon
East
Midlands
38%
26%
East of
England
44%
23%
South
West
40%
40%
West
Midlands
66%
56%
25%
13%
North
East
20%
13%
Yorkshire
& Humber
12%
2%
Scotland
21%
14%
Wales
26%
25%
25%
27%
30%
27%
2014 Market
Appraisals
- Smith Street,
London
- Ashley Avenue,
Oxford
- Times Terrace,
Leeds
- Portland Place,
Sheffield
- Curzon Corner,
Newcastle
- Merville Mansions,
Chester
- Limes Lane,
Cambridge
- Clive’s Close,
Liverpool
2013 Market
Appraisals
Jan|11
Feb|11
Mar|11
Apr|11
May|11
Jun|11
Jul|11
Aug|11
Sep|11
Oct|11
Nov|11
Dec|11
Jan|12
Feb|12
Mar|12
Apr|12
May|12
Jun|12
Jul|12
Aug|12
Sep|12
Oct|12
Nov|12
Dec|12
Jan|13
Feb|13
Mar|13
Apr|13
May|13
Jun|13
Jul|13
Aug|13
Sep|13
Oct|13
Nov|13
Dec|13
Jan|14
Feb|14
Mar|14
Apr|14
May|14
Jun|14
A
B
C
New buyers
traditionally
start looking
for a home
in the spring,
viewing
multiple
properties.
Sales made at
the end of the
year tend to be
concluded with
fewer viewings.
Fewer first
time buyers
and sellers
are in the
marketplace.
Early 2014
saw almost
no seasonal
slowdown, with
the number of
viewings per
sale falling to
a record low.
A
B
C
20
15
0
10
5
Source:Countrywideplc2014Source:Countrywideplc2014
%ofsales
Source:Countrywideplc2014
Source:Countrywideplc2014

6. 10/11 www.countrywide.co.uk
COUNTRYWIDE QUARTERLY MARKET REVIEW Q2 2014
House building has rarely been higher on
the political agenda and it seems likely
that the 2015 election will become a num-
bers game – with the three main parties all
pledging to increase the number of homes
built. While targets tend to be based on
the number of homes built domestically,
analysis of house building rates across Eu-
rope shows that house building in the UK
has long lagged our European neighbours.
Both pre and post recession, the UK has
consistently been building amongst the
fewest homes in Europe taking into account
population size and growth. Per head of
population, and taking into account rates of
growth, the UK builds the 3rd fewest new
homes – 1 for every 2.5 new people. The
recession, while reducing the number of
homes built, hasn’t changed the UK’s rela-
tive position in Europe, with house building
falling by similar rates elsewhere. Only
Switzerland and Luxembourg, with smaller
populations and the highest average house
prices in Europe, build less. While levels of
A decade of house building in Europe
portion of homes required for future years.
In 2007 Spain alone built more houses
than the UK, Germany, Greece, Belgium,
Portugal, Sweden and Denmark combined.
Pre-crash levels of house building have
been used by governments as a bench-
mark of the number of homes that
should or could be built in the UK. The
downturn in construction however should
not disguise the fact that the UK has
failed to build the required number of
homes over an extended period of time.
In reality, many European countries have
been better at building more homes over
much longer periods. A lack of house
building has meant that the UK was
among the least well prepared countries
to deal with any fall in house building. In
2008, house building fell by around 30%
in the UK, exactly in line with the fall
across Europe. The difference between
the UK and much of Europe is that while
Europe was busy building houses during
the late 1990s and early 2000s, in the
past 20 years the UK has never built
large numbers of homes. While compar-
isons are frequently made to the 1930s
and 1960s when the UK was building
250,000+ homes annually, the reality is
that Britain has changed significantly over
the following 50 years. If the government
is serious about delivering the number
of homes the UK needs, it should look to
our European neighbours rather than to
the 1960s for ways of doing it.
The UK needs to look to Europe rather than
the past to increase house building
house building are the product of national
economies, countries can be grouped by
their ability to build new homes. Much of
Northern Europe is characterised by low
but stable levels of delivery, alongside
moderate population growth, a group
which the UK falls into. Central and East-
ern Europe have seen medium to high
levels of new development which has
consistently delivered large numbers of
new homes over the past decade. France,
with a similar population to the UK, built
an average of 375,000 homes annual-
ly over the past 10 years. While house
building may have fallen by a similar rate
to the UK, the French are still delivering
300,000+ homes a year. Finally, levels of
house building in Southern Europe have
proved extremely volatile. Large numbers
of new houses built pre-2007 have given
way to very low levels of house building
post crunch as falling house prices made
development unviable. Each year between
2003 and 2007 Spain built more than
500,000 homes, equating to a a high pro-
Average number of homes
built annually (2004 - 2013)
Population growth per home built (2004 – 2013)
The number of homes
built in the UK in 2013
Population:
Population:
139,950
146,122
The number of homes
built in Poland in 2013
Source: ONS and Central Statistical
Office Poland 2014
Source: Countrywide plc 2014, European Government data 2014
Source: Various European statistical
agencies 2014
Increase in
completions
-20% to 0%
-40% to -20%
More than -40%
CHANGE IN COMPLETIONS (07-13)
2,000
45,000
25,000
21,000
36,000
70,000
3,000
27,000
29,000
4,000
6,000
7,000
33,000
5,000
18,000
179,000
30,000
2,000
2,000
5,0002000
11,000
3,000
28,000
16,000
33,000
15,000
51,000
143,000
50,000
47,000
204,000
376,000
421,000
180,000
BY NUMBERS
VOLATILE DELIVERY - SPAIN
At its peak in 2006 almost 20% of Spanish
GDP growth came from the construction
industry, more than twice the amount in the UK.
1 in 8 of the working population was directly
employed in construction. The Spanish planning
system, unlike the UK system, is based on the
principle of zoning. This gives developers a high
level of certainty when buying land. Developers
knew if schemes conformed to certain size,
height and space standards, planning permis-
sion would almost certainly be granted.
HIGH DELIVERY –
FRANCE
The French planning system
is based on the PLU, a form
of development plan. It sets
out the sort of development
required and where it should
happen. The PLU covers an
area of around 1,550 people
– the smallest plan area in
Europe. In comparison, the
lowest level of planning in the
UK is at Local Authority level
which covers an average of
122,000 people. Given the
plan covers just 1,550 peo-
ple, development plots tend
to be small and therefore
more suitable for smaller
developers and individuals.
Latest data from the French
government shows that
around 40% of houses built
in the last 12 months were
built by individuals, around
eight times the UK average.
4
3
2
1
0
-1
-2
-3
-4
-5
-6
SWITZERLAND
LUXEMBOURG
UK
GEORGIA
SWEDEN
NORWAY
BELGIUM
SLOVENIA
ICELAND
IRELAND
MACEDONIA
ITALY
SPAIN
DENMARK
CZECHREPUBLIC
FRANCE
FINLAND
NETHERLANDS
AUSTRIA
PORTUGAL
POLAND
SLOVAKIA
BOSNIA-HERZEGOVINA
MONTENEGRO
BELARUS
HUNGARY
GREECE
GERMANY
MOLDOVA
ESTONIA
CROATIA
BUGLARIA
ROMANIA
LATVIA
LITHUANIA
SERBIA
ALBANIA
3.0
2.5
2.4
2.3
2.0
1.8
1.7
1.6
1.3
1.3
1.0
1.0
1.0
0.9
0.9
0.8
0.7
0.7
0.4
0.2
0.2
0.2
0.1
-0.8
-0.8
-0.9
-1.0
-1.0
-1.3
-1.7
-2.7
-2.7
-3.7
-3.9
-5.0
-5.9
4.0
Over the last decade the UK
has built one home for each
2.5 new people…
…while France has built
a home for every 0.9
new people.
Newpeopleperhouse(2004-13)
Falling populations
64m
39m

7. www.countrywide.co.uk
Q1 2013
The decision by Lloyds Banking Group and
Royal Bank of Scotland (RBS) to impose a
maximum household loan to income (LTI)
multiple of four to lending over £500,000,
came just weeks before George Osborne
legislated to allow the Bank of England to
“direct” to lenders how much people taking
out larger loans are able to borrow. While
highly geared lending might seem safer than
it was now that the economy is picking up
speed, the fact that the economy is recov-
ering means that the point at which interest
rates begin to rise moves closer. It is the
most highly geared borrowers who are most
vulnerable to rising rates, so a decision to
limit lending to this sector seems prudent.
The £500,000 limit set by Lloyds and RBS
means that it’s really only highly geared
lending in London that is choked off. A
loan to income ratio of four at £500,000
implies a household income of £125,000
which is about 44 per cent higher than the
combined mean gross average earnings
of a male and female working full time in
London. So the policy is less restrictive than
it seems and will hit only those at the higher
end of the price distribution.
Lloyds and RBS have a large market share,
so the policy undoubtedly sends a cau-
tionary message to the market as a whole.
New legislation from the Chancellor doesn’t
necessarily mean much will change. The
Bank of England’s Financial Policy Commit-
tee already has powers to recommend such
limits, but it does undoubtedly send out a
strong signal.
Lenders are already aware of the risks
associated with deteriorating affordability
and the increased vulnerability of highly
geared borrowers. The number of mort-
gage applications failing lenders’ tests has
already been increasing according to the
Bank of England’s credit conditions survey.
In the first quarter of 2014, a much bigger
proportion of lenders reported a reduction
in the numbers of mortgage applications
being approved than they expected just
three months earlier. Looking ahead, one
quarter of lenders expect that there will be a
fall in the numbers of approved applications
showing that there is a clear expectation that
affordability terms and conditions are biting
much harder.
COUNTRYWIDE QUARTERLY MARKET REVIEW Q2 2014
Banks tighten lending criteria
A number of major lenders have introduced a maximum loan to
income ratio for mortgages over £500,000 – but will its impact be felt?
12/13
Credit condition
changes
Proportion of transactions affected by a £500,000 lending cap
£87k
Average earnings of a male and female
couple working full time in London
NORTH EAST
Average house price: £99,313
Affordability limit: £302,211
Affected transactions: 5%
NORTH WEST
Average house price: £109,042
Affordability limit: £305,336
Affected transactions: 7%
YORKSHIRE HUMBER
Average house price: £116,993
Affordability limit: £295,225
Affected transactions: 7%
WALES
Average house price: £113,275
Affordability limit: £291,190
Affected transactions: 6%
WEST MIDLANDS
Average house price: £113,532
Affordability limit: £306,681
Affected transactions: 9%
SOUTH EAST
Average house price: £221,189
Affordability limit: £405,989
Affected transactions: 16%
SOUTH WEST
Average house price: £179,066
Affordability limit: £306,307
Affected transactions: 17%
EAST MIDLANDS
Average house price: £127,384
Affordability limit: £299,397
Affected transactions: 8%
EAST OF ENGLAND
Average house price: £184,980
Affordability limit: £366,054
Affected transactions: 15%
LONDON
Average house price: £414,490
Affordability limit: £430,679
Affected transactions: 35%
10%
0%
-10%
-20%
-30%
-40%
More Than 20%
15% - 20%
10% - 15%
7% - 10%
Less Than 7%
Source: Bank of England 2014
A
A
B
E
C
B
D
F
H
C
ID
J
E
G
F
I
G
H
J
Q1 2014
Next 3 Months
-12%
-25%
19%
-40%
-10%
6%
Approved
applications
Credit
scoring
Qualityof
applications
Greater London
HAMMERSMITH FULHAM
Average house price: £696,344
Affordability limit: £549,728
Affected transactions: 59%
CAMDEN
Average house price: £735,454
Affordability limit: £545,840
Affected transactions: 62%
BRENT
Average house price: £374,643
Affordability limit: £353,152
Affected transactions: 61%
WESTMINSTER
Average house price: £908,786
Affordability limit: £793,963
Affected transactions: 53%
KENSINGTON CHELSEA
Average house price: £1,269,897
Affordability limit: £824,412
Affected transactions: 54%
K
L
M
N
P
Source: Hamptons International
and Countrywide plc 2014
K
P
N
LM
More Than 50%
40% - 50%
30% - 40%
20% - 30%
Less Than 20%
The £500k Loan to Income cap imposed
by Lloyds and RBS will effectively
only choke off highly geared lending
in London, but existing affordability
constraints are already beginning to bite
FIONNUALA EARLEY
DIRECTOR OF RESEARCH HAMPTONS
INTERNATIONAL
*based on local earnings

8. COUNTRYWIDE QUARTERLY MARKET REVIEW Q2 2014
The term ‘renty somethings’ was coined to
describe the growing number of young peo-
ple in their 20s and increasingly 30s who
are living for longer in the private rented
sector. With a growing private rented sector,
over half of the population now live in rental
accommodation in the centre of most larger
cities. At the same time however, research
has consistently shown the appetite for
homeownership remains strong amongst
the young. While for many renting is a ques-
tion of flexibility, for others it is a question
of finances. The result has been first time
buyers showing increasing willingness to
compromise to get onto the housing ladder,
a trend which has benefited some of the
UK’s more deprived inner city areas.
The private rented sector has long
allowed tenants, particularly in more
expensive areas of the country, to live in
areas where they otherwise might not be
able to afford to buy. Typically this is in
a central location, close to the centre of
a city and their place of work. For those
looking to buy a home for the first time
however, a degree of compromise has
always been required.
As house prices have risen, first time buyers
have shown an increasing willingness to buy
in cheaper areas in order to get onto the
housing ladder. Analysis by Countrywide
plc shows that in the first half of 2014, the
average first time buyer in the UK bought a
home in an area which is 10% cheaper than
where they were living previously. Rising
house prices over the last 12 months mean
that this figure is up from 6% on 2012.
The effect has been most pronounced in
the most expensive areas of the country
where the cost of renting relative to buying
is lowest. Taking London as a whole, the av-
erage first time buyer chooses to live in an
area 16% cheaper than where they rented.
This figure is up from 10% in 2012 as rising
house prices have outstripped rents. In the
most expensive parts of London, the South
East and Edinburgh, first time buyers typi-
cally live in areas up to 50% cheaper than
where they previously rented.
The impact of this in London, and other
cities with growing populations, has been
to push first time buyers outwards into
more peripheral areas where house prices
tend to be lower. While in London, out-
The art of compromise
Rising house prices are increasingly
driving buyers to cheaper areas
www.countrywide.co.uk
14/15
Difference in
price between
areas where
first time buyers
bought and
rented previously
Origin of first time buyers
Number of renters moving into homeownership
250,000
200,000
150,000
100,000
50,000
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
Source: English Housing Survey 2013, 2000 - 2013
er boroughs have a larger proportion of
first time buyers purchasing in the same
borough in which they rented, the last 12
months has seen this proportion fall across
London. Eight or nine years ago Hackney,
in East London, began to attract buyers
priced out of more central areas. A com-
bination of Victorian housing stock, lower
house prices, new transport infrastructure
and a reversal of the 1960s trend of leav-
ing the inner city for suburbia, has meant
house prices have soared. The speed of
change is remarkable: Land Registry data
shows that house prices in Hackney have
risen 108% over the last 10 years while
prices across the capital grew 57%.
Hackney’s housing market is now closely
intertwined with that of the rest of London’s
in contrast to that of poorer Boroughs fur-
ther east such as Barking and Dagenham.
57% of first time buyers in Hackney came
from Central or West London in the last 12
months, the largest proportion in any East
London Borough. This influx of new buyers
from across London has meant Hackney
has changed significantly in the last 10
years. In 2004, government data showed
that Hackney was the single most deprived
Local Authority in England and Wales. While
the indices of deprivation won’t be updated
until 2015, Hackney will almost certainly
have relinquished ‘top’ spot.
Hackney is however just one example of
an area which has become the destination
of choice for buyers priced out of central,
more expensive locations. The repopulation
of the inner city since the 1980s has been
led by first time buyers and young profes-
sionals who were attracted by the low cost
of housing.
From Hove near Brighton to Didsbury in
Manchester, our inner cities have changed
significantly over the last 30 years. As a
result people choosing to move to inner
city areas today are increasingly doing so
for reasons of lifestyle rather than cost.
House prices in many inner city areas are
now higher than in their suburban coun-
terparts, having over taken them during
the mid-2000s. While the desire for inner
city living remains strong, rising prices may
once again force first time buyers to begin
looking elsewhere for cheaper options.
The repopulation
of the inner city
since the 1980s
has been led by
first time buyers
and young
professionals who
were attracted
by the low cost
of housing.
HARROW
34%
19%
15%
81%
85%
66%
EALING
HACKNEY
Proportion who previously lived in the Borough
BARKING AND
DAGENHAM
GREENWICH
17% 83% 24% 76% 4% 96%
CROYDON
London
Outside London
-3% to 0%
-6% to -3%
-9% to -6%
Less than -9%
More Than 50%
45% - 50%
40% - 45%
35% - 40%
Less Than 35%
The 2007 downturn had
the effect of restricting
the availability of
mortgage finance
The number moving from
the rented sector into
home ownership has
recovered faster than
transactions overall
Source: Countrywide plc 2014

9. Countrywide House
88-103 Caldecotte Lake Drive
Caldecotte
Milton Keynes
Buckinghamshire
MK7 8JT
Tel 01908 961000
Conveyancing
Lee House
Great Bridgewater Street
Manchester
M1 5RR
Tel 0161 200 8200
Fax 0161 200 8205
Surveying
2 Boundary Court
Willow Farm Business Park
Castle Donington
Derby
DE74 2UD
Tel 01332 813002
Corporate Property Services
Tamar House
The Bridges
Brants Bridge
Bracknell
Berkshire
RG12 9BG
Tel 01344 389 500
Corporate/Emergency/
Commercial/Social Relocation
Thamesgate House
33 Victoria Avenue
Southend on Sea
Essex
SS2 6DF
Tel 01702 236403
Fax 01702 437119
Estate Management -
Leasehold, Commercial,
LPA, Residential Lettings
4th Floor
Thamesgate house
33-41 Victoria Avenue
Southend on Sea
SS2 6DF
Tel 01702 221000
Fax 01702 434145
Lettings
Countrywide House
Sherwood Court
Lake View Drive
Annesley
Nottingham
NG15 0DT
Tel 01623 721222
Property Auctions
80 - 86 New London Road
Chelmsford
Essex
CM2 0PD
Tel 01245 344133
Registered Office
17 Duke Street
Chelmsford
Essex
CM1 1HP
Tel 01245 294000
Fax 01245 294028
For more information please contact:
Corporate Client Enquiries - 0207 9081562
insight@countrywide.co.uk
www.countrywide.co.uk/insight