First-time buyer numbers collapse

Sarah Davidson

August 11, 2015

The South East averaged 86,733 first-time buyers a year from 1974, when records began, up until 2006.

But since 2007 when the financial crash hit, this has plummeted to just 47,863 a year. As a result, this has created a total shortfall of 310,967: the biggest of any English region and 11% more than the entire population of Brighton and Hove (281,100).

The North West has also seen first-time buyer numbers drop from 46,461 a year between 1974 and2006 to 23,875 between 2007 and 2014. This has created a shortfall of 180,685 first-time buyers, exceeding the entire population of St Helens (177,200).

Genworth’s analysis shows the North East’s first-time buyer market has been hardest hit in percentage terms. The average number of first-time buyers between 2007 and 2014 (10,575) is less than half (46%) of the pre-2007 average (23,191): the lowest percentage of any region.

In contrast, London is the least affected in relative terms and has lost just a quarter of its first-time buyers in percentage terms. Its average of 39,175 between 2007 and 2014 is equal to 73% of the pre-recession average, despite the continued house price increases London has seen in recent years.

Simon Crone, vice president for mortgage insurance – Europe at Genworth, said: “Tougher regulation and higher capital requirements for lenders as a result of the recession have accelerated the fall in homeownership and dramatically reduced the number of people – especially younger households – who are able to buy their first home.

“A dual crisis has emerged with the shortage of new homes exacerbated by a shortage of loans traditionally used to help first time buyers get on the property ladder with 5% or 10% deposits.

“Our analysis shows that all regions have felt the impact of the squeeze on first time buyers, regardless of the so-called North/South divide.

“While London and the South East face the biggest pressure of high house prices, a lack of housing supply nationwide and limited access to first-time buyer mortgages has left many regions with years’ worth of ‘missing’ owner-occupiers.”

Changes are underway to the planning system to get housebuilding going, but the Help to Buy mortgage guarantee remains a temporary solution to support first-time buyer aspirations.

Crone added: “Private mortgage insurance is helping building societies to support first-time buyers while banks are largely reliant on Help to Buy.

“It is imperative they consider how to continue supporting first-time buyers when that comes to an end. Failure to tackle all elements together threatens to permanently undermine homeownership for future generations.”

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