A new report from Halifax covering first time buyer data has revealed that although numbers remain below their previous peaks and many potential first time buyers are facing escalating house prices and deposit sizes, record low mortgage rates continue to make buying seem a more attractive option than renting.
According to Halifax, the number of first time buyers increased by an estimated 10% in the first six months of 2016 compared with the same period in 2015,
There were an estimated 154,2001 FTBs in the first half of 2016 compared with 140,500 in the same period last year, an increase of 10%. It was also more than double the market low in the first half of 2009 (72,700). For the same six-month period since 2012, the number entering the housing market has exceeded 100,000. Nonetheless, the number of FTBs in the first half of 2016 was nearly a fifth lower (36,700) than at the peak of the last boom in 2006.
The number of FTBs has increased more rapidly than the number of homemovers over the past few years as a whole. As a result, FTBs have increased as a proportion of all mortgage financed house purchasers from 38% in 2011 to an estimated 47% in 2016. However, the percentage has been stable over the past three years as the numbers of FTBs and homemovers have risen at a similar pace since 2014.
The average FTB deposit in May 2016 was £33,9602 – more than double that in 2007 (£16,400). There has been a 14% rise in the deposit over the past year largely reflecting the increase in house prices over that period.
The 10 least affordable Local Authority Districts (LADs) for FTBs are all in London. The least affordable is Brent where the average FTB property price of £457,014 is 12.5 times gross average annual earnings in the area.
East Dunbartonshire in Scotland is the most affordable LAD in the UK with an average property price of £97,089 – 2.6 times local annual average gross earnings. Copeland in the North West is the next most affordable (2.9). Five of the 10 most affordable LADs for FTBs are in Scotland.
Chris Gowland, Mortgages Director at Halifax, said: “There was a further increase in the number of first time buyers in the first half of the year with the total exceeding 100,000 in the first six months of each year since 2012. This rise has been broadly in line with a general improvement in market activity and is likely to have been helped by government measures including the Help to Buy scheme."
The average price paid by FTBs increased by 12% over the past year from £178,399 to £199,414.
Regionally, the average price paid by FTBs is highest in Greater London (£384,617) – nearly £130,000 higher than the next most expensive region, the South East (£257,481).
Northern Ireland is the least expensive region with an average FTB price of £110,675; 29% of the London average. (See Table 2)
The average deposit has fallen – as a proportion of the purchase price – from 20% in 2013 to 17% in 2016. Nonetheless, it remains significantly higher than in 2007 (10%).
FTBs in Greater London put down the largest average deposit, at £95,693. FTBs in Northern Ireland put down the smallest average deposit (£16,607).
The average age of a first time buyer is 30; up from 29 in 2011. Regionally, the average age of a first time buyer is highest in London (32).
Almost 70% of FTB purchases are above the £125,000 Stamp Duty threshold.
Nationally, almost half (45%) of properties bought by FTBs are priced between £125,000 and £250,000 with 24% of FTB purchases above £250,000.
There are substantial regional differences with all FTBs in Greater London liable for Stamp Duty and 85% of FTBs in the capital paying more than £250,000. In contrast, at least half of all FTB purchases are below the £125,000 starting threshold in the three regions of northern England, Wales, Scotland and Northern Ireland.