The average house price paid by a first-time buyer in November 2011 was affordable for someone on average earnings - based on the ratio of the average house price to earnings being below the long-term average of 4.0 - in 77% of all local authority districts (LADs) in Scotland. This compares with just 31% at the peak of the housing market in 2007.
Nonetheless the number of FTBs continues to decline...
Notwithstanding better affordability, Bank of Scotland estimates that there were around 17,000 first-time buyers in Scotland in 2011; the lowest annual total since 1976, 4% lower than in 2010 and less than half the recent peak of 39,100 in 2006.
...with the average deposit at £22,396
Much of the fall in the number of FTBs in recent years can be explained by the need to put down a bigger deposit. The average FTB deposit in the first eleven months of 2011 was £22,396. Whilst this was 9% (£2,120) lower than in 2010 (£24,516), it compares with £12,794 in 2007. As a proportion of the purchase price, the average deposit has increased from 10% in 2007 to 21% in 2011.
South Ayrshire is the most affordable area in Scotland and the UK for a FTB
South Ayrshire is the most affordable LAD in Scotland with an average property price that is just over two and a half times (2.65) gross average annual earnings, followed by Renfrewshire (2.88) and North Ayrshire (2.94). Seven of the ten most affordable LADs for a FTB across the UK are in Scotland with South Ayrshire the most affordable area in the UK as well as Scotland.
Scotland is the sixth most affordable UK region for FTBs
The proportion of affordable Scottish LADs is the sixth highest among the twelve UK regions and is also close to double the UK average (44%). The North East of England is the only UK region where all LADs are affordable for FTBs. In contrast, London is the only region with no affordable areas.
Over a fifth more FTBs will be required to pay stamp duty in 2012
An estimated 99% of FTBs in Scotland were exempt from paying stamp duty in 2011. Nearly a quarter of FTBs did not pay any stamp duty as a consequence of the temporary increase in the starting threshold for FTBs from £125,000 to £250,000. On this basis, 23% more FTBs - and 24% in total - will be required to pay stamp duty once this concession for those trying to getting onto the property ladder for the first time ends in March 2012.
Nitesh Patel, housing economist at Bank of Scotland, commented:
"Housing affordability for those looking to get onto the property ladder for the first time has improved significantly over recent years, largely as a consequence of the decline in house prices since 2007. As a result, more than three-quarters of towns and cities across Scotland are affordable for first-time buyers compared with less than one-third at the peak of the housing market in 2007. Seven of the ten most affordable areas for first-time buyers across the UK are in Scotland.
"Nevertheless, conditions for potential first-time buyers remain tough, as highlighted by the low numbers of people buying their first property. Difficulties raising the necessary deposit and concerns over the economic climate are preventing many from entering the market."
additional Key findings
Deposits
FTBs in Greater London put down the largest average deposit in the UK which, at £60,192, is equivalent to a quarter (25%) of the average property value. FTBs in the North (of England) put down the smallest average deposit - £14,882 or 15% of the property value.
Prices
Nationally, the average house price paid by a FTB in Scotland in 2011 is £105,624; down 1.4% on 2010.
The average price paid by a FTB is highest in Greater London (£240,768) and lowest in the North (£96,324).
Age
The average age of a FTB in Scotland is 29 years old, in line with the UK average. FTBs in the North, Yorkshire and Humber and Wales are, on average, the youngest at 28 year olds. The average age of a FTB is highest in London at 32.
Whilst the average age of a FTB has been largely static in recent years, there has been a significant increase in the proportion receiving financial help. The CML estimate that 64% of FTBs required financial assistance in 2011 Quarter 3 compared with 31% in mid-2005. The typical age of those FTBs who did not receive assistance has increased from 30 to 33 since early 2008.
Mortgage Affordability
The proportion of disposable earnings devoted to mortgage payments by a potential new first time buyer in Scotland stood at 23% in 2011 Quarter 3; well below the peak level of 38% in December 2007.
