42 per cent rise in first-time buyers
The number of first-time house buyers has risen by 42 per cent year-on-year, research has revealed.
The latest First Time Buyer Opinion Barometer from LSL Property Services showed that there were 22,400 first-time buyer transactions in February 2014, compared to 15,800 in February 2013.
Average first-time buyer deposits also fell by four per cent year-on-year, their lowest in 16 months at £25,773, as house price expectations fuel an increase in first-time buyer spending, after 81 per cent of first-time buyers said they expect house prices to continue rising in the next 12 months.
David Brown, Commercial Director of LSL Property Services, said: ‘The deposits that first-time buyers need have fallen to a sixteen month low — but that doesn’t mean that saving for a deposit is no longer an uphill struggle.Real wages are still falling. Savings rates are still punishingly low.’
The government’s Help-to-Buy scheme has contributed to the boost in first-time buyers by increasing access to mortgages and the number of tenants who think they will never be able to afford to buy has halved in the last eighteen months, dropping from 20 per cent to 10 per cent.
Mr. Brown commented that: ‘Help to Buy has catalysed the recovery of the first-time buyer market, by encouraging more lending to borrowers with smaller deposits.
‘The extension of the scheme announced in the Budget will see that support carried through until the end of the decade. Despite pressure to slim down Help to Buy, the Chancellor has chosen not to abandon first-time buyers. Instead, George Osborne is adding extra muscle to the new-build arm of the scheme. While that will encourage more construction, it’s also offering first-time buyers a leg-up onto the housing ladder.’
In February, the average first-time buyer was 31-years-old with an annual salary of £36,330, however, in London first-time buyers have to wait longer and earn more to get onto the housing ladder, with the average first-time buyer being 33-years-old with an annual salary of £41,885.
Londoners also pay the highest on average for a first-time property, with first-time buyers in London paying more than three times as much as first-time buyers in Northern Ireland, comparing average prices of £280,477 to £91,583.
The South East and the South West were the second and third most expensive regions for first-time buyers, with average purchase prices of £191,242 and £169,672 respectively.
In London and the South East the market is markedly different to the rest of the UK, with 61 per cent of first time buyers looking to purchase a flat rather than a house, a whopping five times more than in the rest of the UK, with the most popular choice for first-time buyers in the capital being two-bed flats, with over a third of people desiring this type of property.
Mr Brown remarked that: ‘Nearly all first-time buyers expect the property market to continue thriving this year, as the economic recovery strengthens. But there remain significant variations across the UK. Prices have been going up quickly in London and the South East, but for the savvy first-time buyer, there are still bargains to be had in areas like Northern Ireland and Wales.’
The research was carried out by LSL Property Services, the second largest property services company in the UK. LSL uses monthly data from registered first-time buyers in its estate agency brands Your Move and Reeds Rains to update the CML’s first-time buyer data. The term ‘first-time buyer’ is here denoted by the purpose of a buyer’s registration, rather than their LTV.