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Number of first-time buyers drops to seven-year low as prices increase

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Written by: Shekina Tuahene
03/09/2020
The first six months of 2020 saw 116,843 first-time buyers, a 29% drop on the 164,800 seen in the first half of last year, data from Halifax suggests.

This decline in buyers coincides with an increase in costs over the last decade. According to Halifax, property prices for first-time buyers have gone up 69% from an average £142,473 in 2010 to £241,025 today.

This includes a 7% rise over the last year. 

Affordability has fallen sharply over the past decade, with the number of affordable local authority areas for first-time buyers dropping from 120 to just 20.

However, despite the fall in numbers and increased expenses, first-time buyers still made up 52% of the property market this year compared to 38% in 2009. 

The Help to Buy scheme has propped up this segment as Halifax said first-time buyers’ market share had steadily risen from 44% since its introduction in 2013.

Overall, the Help to Buy scheme has allowed over 270,000 buyers to get onto the property ladder, but it has also been accused of pushing up property prices and being overly generous for existing homeowners. 

Tom Martin, mortgages director at Halifax, said: “While the number of first-time buyers suffered a sharp fall during lockdown, numbers are beginning to increase as we approach the autumn, with purchases that were paused beginning to move again, and buyers making the most of the government’s stamp duty changes. 

Regional differences 

The cost of a property for a first-time buyer in London has increased by 98% since 2010 to £463,536 while prices in the South East rose 73% to £303,838.

Prices in the East Midlands went up 68% to £187,525. 

Wales saw the sharpest increase in property prices over the last year of 9% to £159,582, while those in London and the South West have seen the smallest increase of 3% to £463,536 and £225,176 respectively. 

Rising deposits 

For London-based first-time buyers, the average deposit is more than double the national average at £109,146. This will cover 24% of the average property price. 

The average deposit of £31,257 in Scotland makes up the second largest share of the overall property price at 20%, while buyers in East Anglia and the South West will typically have a 19% deposit with their average savings of £42,882 or £42,318 respectively. 

The standard deposit for first-time buyers in the UK was £47,059 in 2020, which will account for 20% of the overall property price. 

This is 25% more than the £38,467 required in 2010 and at the time, this would have covered 27% of the house price.  

The average age of a first-time buyer has remained consistent over the past 15 years, rising from 30 in 2005 to 31 today.  

The youngest first-time buyers can be found in North East Derbyshire in the East Midlands, where the average age is 28. The oldest are in Richmond upon Thames, London, where the average age is 36.

Affordability

Areas are considered ‘affordable’ when property prices are no more than four times the local earnings.  

The most affordable area for a first-time buyer is in North Ayrshire, Scotland, where the average property is 3.2 times average local earnings.  

Half of all the most affordable areas for first-time buyers can be found in Scotland, with Barrow-in-Furness and Pendle in the North West also both at 3.4 times the local earnings.  

Some nine of the 10 least affordable areas can be found in London, with Brent, where average first-time buyer properties cost 12.3 times the average income, the UK’s least affordable area. Oxford also makes the list with properties costing 11.6 times the average local salary.  

Martin added: “With first-time buyers in London paying almost double what they were a decade ago, yet many regions in Scotland remaining affordable, the challenges facing first-time buyers are clearly significantly influenced by where in the UK they are house hunting.” 

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