First-time buyers under pressure in May
Research from Your Move and Reeds Rains claimed the number of first-time buyers completing property transactions in May fell by over 18% compared to the same time last year. There were 22,000 transactions in May 2015, 18.1% lower than May 2014’s figure of 27,100.
May’s figure is 0.9% lower than April’s figure of 22,400 first-time buyer completions. May did see significantly more sales than three months ago (+16.2%), but February’s figure of 19,100 represents a seasonally quiet time of year.
On top of the uncertainty surrounding the election, first-time buyers are facing the need for growing deposits both in real and relative terms.
As of May, the average deposit for a first-time buyer stands at £25,134, up 1.7% on the previous month and 4.2% on a year ago.
Moreover, the average deposit as a proportion of income is on the rise for the first time in four months – up one percentage point month-on-month to 64.4% of average income in May.
Adrian Gill, director of estate agents Your Move and Reeds Rains, said: “Despite record-low mortgage rates, a growing economy and the start of significant wage growth, the uncertainty surrounding the election seems to have triumphed, albeit momentarily.
“Many pundits predicted a hung parliament, and this political confusion seems to have caused many would-be first-time buyers to keep their powder dry in the run-up to May – until it became clear what the government was and what its housing policies were going to be.
“A second and more permanent root to the disappointing first-time buyer figures is the challenge of cultivating a deposit.
“Many first-time buyers are still on tight monthly incomes, struggling to save while savings rates stay so low. Meanwhile, deposits are rising primarily as property prices continue their seemingly unstoppable upwards march.
“This is wholly due to a lack of housing supply versus a stack of housing demand. If we want to see property prices stabilise and deposits fall as proportions of income, the government must address the housing supply problem, for which there is only one solution: build more homes.”