6th January 2015
The number of first-time buyers jumped by more than 20% in 2014, marking the third consecutive annual increase according to the annual Halifax First Time Buyer Review.
The lender’s report said that last year the number of first-time buyers (FTBs) grew by an estimated 22%; similar to the 23% rise in 2013.
Overall there were an estimated 326,500 FTBs in 2014, up from 268,500 in 2013. This was the highest annual total since 2007, which registered 359,900, and was 70% higher than in 2008, at 192,300.
Mortgage affordability has improved significantly in recent years, on the back of record low interest rates, helping more young buyers get on the property ladder. In fact the study found that the proportion of disposable earnings devoted to mortgage payments by a first-time buyer stood at 32% in 2014 during the July to end of September period, marking a substantial improvement compared with the summer of 2007 when this figure reached a peak of 50%.
The average FTB deposit in 2014 was £29,218; 7% lower than in 2013, at £31,582. This decline was primarily due to the greater availability of loans requiring a relatively small deposit during the past year. Nonetheless, the average deposit is still £11,718, or 67% higher than in 2007, which stood at £17,499.
Craig McKinlay, mortgages director at Halifax, said: “First-time buyers are vital for a properly functioning housing market. Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time, contributing to the significant increase in the number of first-time buyers in the past two years. Record low mortgage rates and Government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property.”
The survey also found that the average age of a first-time buyer is 30 years old; up from 29 in 2011 and that nearly six in 10 FTB purchases are now above the £125,000 stamp duty threshold.
The recent changes to the stamp duty system have saved the average FTB £781, reducing the tax bill for the average priced FTB property of £171,870 from £1,718 to £937.
The proportion of FTBs exempt from paying stamp duty fell to 41% in 2014 from 45% in 2013. Almost half, at 47%, of properties bought by FTBs were priced between £125,000 and £250,000. Nationally, only 13% of FTB purchases were above £250,000 in 2014. There were, however, considerable regional differences with more than half FTBs in Greater London, at 56%, paying more than £250,000.
In addition, the average price paid by FTBs increased by 9% in 2014, from £157,911 to £171,870; just 2% lower than in 2007.
The average price paid by first-time buyers is highest in Greater London, at £323,333, more than £100,000 higher than the next most expensive region, the South East, at £212,635. With an average price of £100,320, Northern Ireland is the least expensive region in the UK to get on the bottom rung of the housing ladder.