Interesting new data from the Halifax has revealed that first-time buyer numbers decreased marginally in 2015, but passed the 300,000 mark for the second consecutive year.
The total of 310,000 represents a slight fall from the 311,700 recorded in 2014 and is the first dip in first-time buyer numbers since 2011. Despite this, numbers are still up by 60% from the 193,700 recorded four years ago.
Price is right
Numbers of first-time buyers may have marginally fallen, but the average price paid for a property by this particular group increased by 10% during the last year. The average price paid by first-time buyers increased from £172,563 to £190,180.
In terms of deposit, the average amount put down by would-be purchasers was £32,927. This was 13% greater than the £29,094 recorded in 2014 and 88% more than the average deposit in 2007.
25 year mortgages have been the norm for a considerable amount of time. However, increasing numbers of first-time buyers are taking out mortgages where payments are spread out over a longer period. In 2007, the proportion of first-time buyers looking for a 35 year mortgage was 16%. In 2015, this had risen to 26%. In the same period, the share of mortgages with terms between 20-25 years fell from 48% to 30%.
‘For the second year in succession, the number of buyers getting on the first rung of the housing ladder has reached 310,000,’ noted Craig McKinlay, Mortgages Director at the Halifax. ‘Although the average price of the typical first-time buyer home has grown by 10% in the past year, the number of buyers taking that first step onto housing ladder has been supported by favourable economic conditions; namely, record low mortgage rates, rising employment and real pay growth.’
Of all house purchases made with a mortgage during the last year, 46% were made by first-time buyers. In addition, first-time buyers were given a shot in the arm by Stamp Duty changes announced in December 2014.
This change benefited first-time buyers in London the most, with purchasers buying property at the average price of £367,990 paying £8,399 in stamp duty, as opposed to £11,039 before the alterations.
‘Whilst affordability has improved since 2007, in many parts of the country the ratio of the average house price to earnings is still significantly above the long-term average of 4.0. This is a concern as it could prevent many potential buyers from entering the market.,’ McKinlay concluded.