The data from Your Move & Reeds Rains shows an increase of almost half (47.7%) on February’s total, which stood at 22,000. This means that, between February and March, the total flow of buyers managing to step foot on the ladder for the first time grew by 10,500.
On an annual basis, the total number of first time buyers in March grew by 34.9% – or 8,400 – compared to March 2015’s figure of 24,100 one year previously.
The strong figure has been attributed in part to a lightening of homeownership costs and the charges associated with it.
The average purchase price paid by first-time buyers in March stood at £166,559. The figure represents a 1.2% dip – or £1,980 lower in absolute terms – on February’s average of £168,539, which previously marked the highest average price on record.
Deposit and monthly mortgage payment costs also declined somewhat. First-time buyer deposits averaged £28,233 in March – a 4.1% (£1,218) lightening on February’s total of £29,451. In addition, the proportion of an average first-time buyer’s monthly income that is consumed by deposit costs fell 3.1 percentage points between February and March – from 74.9% to 71.8%.
Meanwhile, over the same period, monthly mortgage payments accounted for a steadily decreasing amount of average first-time buyer income – falling from consuming 20.4% of monthly income in February to 20.3% as of March.
Besides the falling costs of homeownership, lending conditions for first-time buyers have remained favourable. The average LTV ratio reached 83% in March, marking a 0.5 percentage point uptick on the previous month. Between February and March, the proportion of the mortgage market accounted for by higher LTV loans rose 1.4 percentage points, from 15.7% to 17.1%.
Alongside this, the average first-time buyer mortgage rate continues to fall, dropping from 3.14% in February to 3.13% in March.
Adrian Gill, director of estate agents Your Move and Reeds Rains, commented:
“A flurry of first-timers illustrates a property market progressing at a powerful pace as we head further into 2016. Much was made of March being the month of the buy-to-let landlord and the second-home owner. To an extent that was true – but it’s now clear none of that interest was at the expense of the bottom rungs of the ladder. Would-be first-time buyers are clamouring to own their own home, and we are seeing a sustained surge in demand for suitable homes this spring.
“First-time buyers are benefitting from some fiercely fortunate conditions in March. With a golden combination of high LTV lending and low mortgage rates, securing the finance for a first home is within the reach of many who previously wrote it off as a pipe dream. There are also encouraging signs that rising home values – ever the nemesis of the cash-conscious first-time buyer – are beginning to cool. This is partly a result of the Government-backed affordable home scheme increasing supply at the lower end of the market and partly an indication that those setting foot onto the ladder are toughening up their act by driving harder bargains with vendors or finding good value locations in which to become a homeowner.
“While deposit costs are considerable – and continue to consume a large chunk of first-time buyer income – there are signs that the financial burdens they impose are gradually lightening. As wages steadily rise and inflation remains very low, many first-time buyers are finding that, in real-terms, they are getting better off. So, even if deposit levels aren’t quite falling at the rate many would like to see, those looking to own a home for the first time are finding that the economic climate is making them better able to carry the cost.”
