FTB property transactions at eight-year high

July saw 29,700 first-time buyers complete property transactions, the highest since August 2007 when it stood at 35,300, according to Your Move and Reeds Rains.

Related topics:  Property
Rozi Jones
28th August 2015
FTB 2

This month’s figure also represents a 28% rise on April 2015 (23,200) – amounting to a 6,500 increase over the last three months – as well as a 4.9% month-on-month uptick on June’s figure of 28,300.
 
The news comes despite the rising immediate costs of buying a home. The average first-time buyer deposit in July totalled £27,975, marking a 10% increase on July 2014’s figure of £25,429. In cash terms, this equates to a rise of £2,546. The cost of a deposit as a proportion of a first-time buyer’s average income reached 71.6% in July, surging 3.1 percentage points in one month alone and rising 5.4 percentage points from 66.2% a year ago.
 
Equally, the average first-time buyer Loan to Value ratio is steadily dropping. This means first-time buyers are having to pay more up-front, in the form of larger deposits. July’s rate, 82.7%, represents a 0.5 percentage point decrease on LTVs in June and a 0.2 point decrease on a year ago, as the size of the average deposit rises.
 
A similar picture emerges in the latest Mortgage Monitor from e.surv. The data revealed a decline in the number of small-deposit loans given approval in July, dropping 5.9% compared to June and 7.1% compared to July 2014.
 
Adrian Gill, director of estate agents Your Move and Reeds Rains, commented:

“First-time buyers are experiencing a summer of white-hot activity, unimpeded by rising deposit costs. The post-General Election bounce has given way to a more stable optimism, as first-time buyers realise that the property market – at least their end of it – is at no immediate risk of being tampered with by the Government. Rather, incentives attractive to first-time buyers – such as the Help to Buy scheme – are running along steadily, while further low-cost housing development is being encouraged to entice more people onto the ladder.
 
“This month’s particularly high transaction rate is also partially due to expectations that the Bank of England may announce a rate rise sooner rather than later. The thought of months of rock-bottom mortgage rates being brought to an end is encouraging many wavering first-time buyers to jump on the property ladder before repayment costs shoot up. Some may have held back briefly when considering the rising deposit costs. But real wages have been growing too, and first-time buyers are able to shoulder the short-term burden of a slightly higher deposit to spare the risk of losing out on a good mortgage deal.”

Home values have continued to climb steadily this month. The average purchase price for a first-time buyer home in the UK stood at £161,985 in July. This figure represents a 1.9% rise on June and an 8.9% – or £13,200 – rise on July 2014.
 
Despite some lenders starting to withdraw their cheapest deals, the average first-time buyer mortgage rate continues to fall, but at an increasingly slow pace. The average rate fell 0.75 percentage points between July 2014 and July 2015, from 4.19% to 3.44%. However, it fell 0.12 percentage points over the last three months and only 0.02 points between June and July of this year.
 
Adrian Gill continued:

“So long as the economy continues on its upward trajectory and the aspiration for home-ownership remains strong, property prices can only increase. While the higher deposit and mortgage costs this brings may be a bother for some, taking a longer view, it’s a sign of a vibrant and dynamic property market.
 
“What may be more concerning for first-time buyers is that average mortgage rates may be on the verge of climbing back up. But first-time buyers shouldn’t worry. When a rate rise does come it is likely to be slight and gradual – so home-ownership will by no means suddenly become a costly dream. Instead, it will remain an affordable reality for those first-time buyers with the drive and determination to make it so.”

London is still the most expensive place for first-time buyers, with average first-time buyer house prices standing at £274,868 in the three months to July 2015. The second-most expensive place for first-time buyers was the South East, where the average house price over the same period was £201,652. Nationally, the average price for a first-time home stood at £149,713 in the three months to July 2015. The North East and Northern Ireland are the least expensive regions for first-time buyer properties, with average prices standing at £109,240 and £106,176 respectively.
 
On average, Londoners put down a deposit of £66,876 in the three months to July 2015 – more than five times the size of the average first-time buyer deposit in the North East (£17,659). The East of England is the region with the second-largest deposit, coming in at an average of £45,798 in the three months to July 2015.

Adrian Gill concluded:

“A north-south divide seems to be opening in the UK housing market. Alongside the usual suspects – London and the South East – occupying the top spots in the house price league tables, the South West has shot up the rankings. The rise of the region has much to do with the growth of its major cities – Bristol, Bath and Exeter. As London becomes increasingly expensive and crowded, many individuals with younger families are looking to live and work in other big cities with a more relaxed vibe, and it’s here that the South West really excels. Equally, the East of England keeps up its recent record of strong showings. Boasting progressive, technologically-minded cities such as Norwich and Cambridge, alongside efficient transport links with the capital, the region is an ideal choice for young professionals seeking to get more value for money than they would in London.”

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