Saturday, 06 March 2021

First-time buyers not deterred by lockdown

First-time buyers not deterred by lockdown

SOARING house prices failed to deter first-time buyers in 2020, according to research by the Halifax.

An end-of-year report on the UK housing market revealed that the average first-time buyer deposit amount leapt by more than £10,000 during the course of the year.

With sales activity largely grinding to a halt during the spring period coinciding with the initial coronavirus lockdown, the overall number of first-time buyers in 2020 was down by more than 46,000 — a 13 per cent drop compared to 2019.

However, first-time buyer transactions bounced back strongly in the second half of the year — rising 52 per cent from 121,050 to 183,607 — once the market reopened.

Comparing the second half of 2020 to the same
six-month period in 2019, first-time buyer transactions were down just two per cent — compared to 26 per cent in the first half of the year.

In total, the number of first-time buyers as a proportion of all homes purchased with a mortgage remained stable last year at 50 per cent, compared with 51 per cent in 2019 and 50 per cent in 2018.

Northern Ireland (-23 per cent), Wales (-23 per cent) and Scotland (-21 per cent) experienced the biggest decreases in the number of first-time buyers last year.

London’s first-time buyer figure fell by the smallest percentage of any region, down by just six per cent year on year.

Halifax managing director Russell Galley said: “Whilst these figures confirm the almost inevitable fall in the overall number of first-time buyers in 2020, with the entire housing market effectively shuttered during the first national lockdown, they also underline just how strong the bounce back was in the second half of the year.

“Despite the obvious challenges presented by soaring house prices, not least the need to raise an even bigger deposit, first-time buyers still accounted for half of all home purchases, a reassuring statistic given their overall importance to the market.

“However, with the economic impact of the pandemic likely to be felt most keenly by the young and those in lower-paid jobs, the need to prioritise improved housing availability and affordability for all those looking to make that first step onto the property ladder becomes ever greater.”

The average price paid by a first-time buyer in the UK last year was £256,057 — an increase of £22,939 (10 per cent) from a year earlier (£233,118).

London saw the biggest monetary increase in the average price paid by first-time buyers over the last 12 months, up by £33,486 (seven per cent) from £455,611 to £489,098.

The greatest percentage growth came in the West Midlands, up by 11 per cent (£19,565) from £185,682 to £205,246. The smallest increase came in Scotland, up by just over one per cent (£2,133) from £153,278 to £155,411.

When it came to deposits, the average amount put down by a first-time buyer in 2020 was £57,278, compared to £46,449 the year before, a rise of more than 23 per cent (£10,829).

Average deposits for first-time buyers in London were up by £20,211 (18 per cent), from £110,145 to £130,357.

Other areas of the country also saw big increases, with the average first-time buyer deposit growing by 25 per cent (£6,634) in Wales, from £26,029 to £32,663.