FTBs up 50% since 2012

The number of first-time buyers increased by more than a fifth in 2014, growing by 22% and resulting in a 50% rise over the past two years.

Related topics:  Finance News
Rozi Jones
6th January 2015
young ftb couple with boxes

According to the annual Halifax First Time Buyer Review, there were an estimated 326,500 FTBs in 2014, the highest annual total since 2007 (359,900) and 70% higher than in 2008 (192,300).

FTBs also accounted for 46% of overall house purchases in 2014, up from 44% in 2013.

Halifax put the increase down to record low mortgage rates, with the proportion of a FTB's disposable earnings devoted to mortgage payments at 32% in Q3 2014 compared to 50% in Q2 2007.

Seven of the 10 most affordable districts for first-time buyers were in Scotland, while all ten least affordable areas were in London. The least affordable is Camden where the average first-time buyer’s property price of £614,315 is 11.4 times gross average annual earnings in the area.

There has, however, been an overall increase in the proportion of areas that are affordable for FTBs since 2007. In a quarter (26%) all of local authority districts in the UK the average house price paid by a first-time buyer in the 12 months to November 2014 was affordable for someone on average earnings. This compares to the peak of the market in 2007 when just 5% of districts were affordable.

Fall in the size of the average deposit has also contributed to rising FTB figures. The volume of lending to FTBs at a loan to value ratio of 90% and above increased from 26% in 2013 to an estimated 31% in 2014.

The average FTB deposit in 2014 was £29,218; 7% lower than in 2013 and, as a proportion of the purchase price, fell from 20% in 2013 to 17% in 2014.

However, the average FTB house price increased by 9% in 2014, from £157,911 to £171,870; just 2% lower than in 2007.

Craig McKinlay, Mortgages Director at Halifax, commented:

“First-time buyers are vital for a properly functioning housing market. Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time, contributing to the significant increase in the number of first-time buyers in the past two years. Record low mortgage rates and Government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property.”

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