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First-time Buyer

Help to Buy fuels 42% rise in first-time buyers

Mortgage Solutions
Written By:
Mortgage Solutions
Posted:
Updated:
28/03/2014

The number of first-time buyers transactions is 42% higher than a year ago, according to research by LSL Property Services.

A total of 22,400 first-time buyer transactions were completed in February, 42% up on the same month in 2013.

LSL said the Help to Buy scheme had been a key driver for first-time buyers and had pushed down the cost of a deposit, despite house prices continuing to rise. The typical property for a new buyer rose 12% to £148,782 in the last year while the average deposit fell to £25,773.

In London and the South East, six in ten first-time buyers (61%) are looking to purchase a flat rather than a house, five times more than in the rest of the UK (12%).

Two-bed flats were the most popular choice for first-time buyers in the capital – with over a third (35%) looking for this type of property.

First-time buyers in London are also more receptive to buying new builds. Half of buyers in London and the South East (49%) said they were considering buying a newly constructed property, compared to just a quarter (25%) in the rest of the UK

David Brown, commercial director of LSL Property Services, said: “The reason first-time buyers are taking advantage of Help to Buy in such numbers is that they expect prices to keep rising. That’s pushing up demand in the short term, which is supporting prices in the long term.

“Rising prices and growing transaction numbers are encouraging house building, which will boost the country’s housing stock. The question is whether supply will now catch up with demand of its own accord – or does the government need to do more to boost building? It may be time for an overhaul of the planning rules which have hampered house-building in the UK, delivering lower levels of house building at a time when the need for more new housing keeps growing.

“We asked first-time buyers what they thought house prices will do over the next 12 months and over 80% said they think prices will rise reflecting the fast growth in buyer confidence in the housing market.”