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Property affordability up; first-time buyer numbers rise

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The proportion of affordable towns and cities has risen to its highest in a decade according to the latest Halifax First-Time buyer review

The review, comprising data from Halifax,  the Council of Mortgage Lenders and the Office of National Statistics, showed that averagely-priced property for a first-time buyer was affordable in more than half (54%) of the 286 local authority districts (LADs) measured.

Affordability for a first-time buyer was defined as when the average house price in the area was lower than four times the average earnings of someone in that region.

The proportion of affordable LADs is now almost eight times the number at the peak of the housing market in 2007, a significant rise which Halifax attributes to a fall in house prices. Martin Ellis, housing economist at Halifax, called the trend ‘encouraging’.

The review also revelaed that the number of first-time buyers grew in the first half of 2012 by approximately 34% compared to the same period in 2011. This appears to reflect a significant improvement in household affordability.

Nevertheless, it an increase from a historically low level, as the number of first-time buyers in the first half of 2012 is less than half the number a decade ago (244,700).

The recent ending of the stamp duty holiday is also thought to have boosted the number of first-time buyers in the first quarter as they wished to beat the March deadline, meaning that this growth may not be prolonged.

Furthermore, the ‘continued uncertainty’ of the UK economy and the ‘difficulties…in raising the necessary deposit’ are still potent challenges to first-time buyers, according to Ellis.

There is also a significant North South Divide with just 9% of all UK affordable LADs being located in Southern UK; with London accounting for nine of the ten least affordable LADs. Therefore, although the report seems to be promising, Ellis says there still ‘remain significant hurdles for those wishing to buy their first home’.

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