First-timer buyer market stabilises

Sarah Davidson

November 28, 2014

A total of 26,500 transactions were issued, representing an 1.1% drop off from the month before, yet the monthly total was still 0.8% higher than October last year.

First-timer transactions have fallen by 12.3% over the last three months, with more significant falls happening between August and September (7.3%) and July and August (4.3%).

Average first-timer purchase prices rose by 4.1% year-on-year to reach £152,684 in October 2014, however over the same period the average deposit has fallen by 6.0% to £26,046.

David Newnes, director of estate agents Your Move and Reeds Rains, said: “Help to Buy reinvigorated the bottom of the market by adding that vital ingredient – confidence.

“But other factors have pulled this back over the last few months: confusion over a base rate rise, global uncertainty, falling house prices and an inadequate supply of affordable homes have all contributed to a hesitation among first-timers about whether now is the right time for them to buy.

“Stalling first-time buyer completions is down to dipping demand, rather than mortgages becoming less accessible.

“Compared to a year ago, there are now more options for first-time buyers unable to save up large deposits to get on the ladder.

“Cheaper rates have also played a part, by allowing first-time buyers to lock into cheaper monthly repayments.”

When it comes to loan to income caps seven out of 10 (67%) first-timers said they had never heard of them, while just one in five (20%) knew and understood what they are.

In London and the South East the typical first-time buyer was 31 years old and earning £44,800, whereas in the rest of the UK the average was 30 and making £33,000.

First-time buyers in the capital paid £270,881 on average for their property in the three months to October 2014, compared to £145,992 across the whole of the UK.

The typical deposit was £73,913 in London compared to an average of £26,711 across the UK.

Newnes added: “The affordable housing conundrum is even more of problem in London, where the lack of affordable housing stock is artificially inflating first-time buyer purchase prices.

“As a result, London first-time buyers have to wait longer to get on the housing ladder. Mansion tax is high up on the agenda for London – but it is important that the other end of the buyer spectrum doesn’t get forgotten.

“First-time buyers have propped up activity over the last year, and they require continued support, otherwise a large driver of activity in the capital could fall away.”

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