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Sunday, 24 March 2019
FIRST-time buyers are making up the biggest part of the property market for the first time in almost a quarter of a century, a new report has found.
Last year saw the number of first-time buyers reach 372,000 — accounting for the majority of home purchases for the first time since 1995, according to the latest Halifax First-Time Buyer Review.
The number of first-time buyers has gone up two per cent in the last 12 months, continuing an upward trend over the last seven years.
Although growth in 2018 was at a slower rate than 2017 (7.6 per cent) and 2016 (nine per cent), first-time buyers overall have increased by 92 per cent from an all-time low of 192,300 in 2008.
First-time buyers now account for just over 50 per cent of all house purchases with a mortgage — an increase from 38 per cent a decade ago.
Halifax data revealed that the average price paid for a typical first home has gone up by 39 per cent, from £153,030 in 2008, to £212,473 in 2018, and the average deposit has increased by 57 per cent from £21,133 to £33,252 over the same period.
The average deposit put down by a first-time buyer was 14 per cent of the purchase price in 2008 (£21,366), jumping dramatically to 20 per cent in 2009 — the highest over the last decade.
In 2018 the average deposit has come down to 15 per cent of the purchase price, although the average property price has continued to increase.
UK first-time buyers are putting down an average deposit of £32,841, with those in London stumping up an eye-watering £110,656, while those in Wales are paying the lowest average deposit of £16,449.
Terraced houses, closely followed by semi-detached properties have continued to be the first-time buyer’s home of choice over the past decade, making up two-thirds (67 per cent) of mortgages for first homes in 2018.
The average age of a first-time buyer in 2018 has remained at 31 — two years older than a decade ago. In London it has grown from 31 to 33 since 2008 — the oldest in the UK. The biggest increase in age was in Northern Ireland, up by three years from 28 to 31.
Halifax managing director Russell Galley said: “New buyers coming on to the ladder are vital for the overall wellbeing of the UK housing market, and the continued growth in first-time buyers shows healthy movement in this important area — despite a shortage of homes and the ongoing challenge of raising a deposit.
“Last year was the first year that first-time buyers accounted for the majority of the market since 1995, which shows that the factors reducing some of the associated costs — such as continued low mortgage rates and stamp duty – are supporting the increasing number of people taking their first step on to the property ladder.”
While the numbers of first-time buyers have increased nationally, the number of first-time buyers in Scotland and Wales has fallen over the past year.
London and the South East have seen the fastest rise in average price paid and deposit put down by first-time buyers over the last five years.
However, the average price paid in London grew only by 1.4 per cent and the deposit fell by 1.4 per cent over the last 12 months.
This is in contrast to the 50 per cent growth in first-time buyer prices in London in the five years to 2018, compared to growth of 36 per cent nationally.
The highest rise in house prices for first-time buyers is in Northern Ireland, up 7.5 per cent in the last 12 months, although prices paid in Northern Ireland are still 16 per cent lower than in 2008, and the number of first-time buyers in the region has more than tripled over that time.
Deposits grew fastest over the last year in the East and West Midlands, the South West and East Anglia, reflecting the continued increase in prices for first-time buyer properties.
Meanwhile average deposits in Scotland, Wales and the northern regions in England fell by between two per cent and nine per cent, driven by a decrease in the average deposit as a percentage of the purchase price, combined with slower house price growth.
The top 10 most affordable local authority districts in the UK are all in the North West and Scotland. The most affordable are Pendle in Lancashire and Copeland in Cumbria, with an average property price of £88,852 (Pendle) and £110,930 (Copeland), 2.6 times the local average gross annual earnings.
The most affordable local authority district in Scotland is East Ayrshire with an average property price of £94,376 — three times the average gross annual earnings.
Of the 10 least affordable local authority districts, nine are in London. The least affordable is Brent where the average first-time buyer property price of £500,088 is 13.3 times the gross average annual earnings for that area.
Oxford has joined the top 10 list since 2017, where the average first-time buyer property price is £400,730 — 10.9 times the gross average annual earnings for that area.