Sales to first time buyers in England and Wales reach seven year high
The number of first time buyer sales in England and Wales rose to a seven year high in July and they are paying smaller deposits, new research shows.
There were 30,000 first time buyer sales last month, a quarter more than 24,100 a year before, according to the latest First Time Buyer Tracker from Your Move and Reeds Rains, part of LSL Property Services.
It was the highest number of monthly first time buyers since August 2007 and data from estate agency chains also reveals the average first time buyer deposit fell 10% year on year from £29,609 a year ago to £26,642 in June 2014, a drop of almost £3,000 in a year.
The average deposit fell as a proportion of average first time buyer income as a result. Twelve months ago, the average deposit represented 82.6% of a first time buyer’s income. In July 2014, that had fallen to 72%. The average first time buyer income stood at £37,000 in July compared to £35,843 a year ago.
Over the same period, the average first-time buyer LTV has risen from 79.5% to 82.9%, helped by the increase in higher LTV lending facilitated by Help to Buy.
‘The first time buyer market is still active, even as the wider property market is starting to show signs of cooling down. As the economic recovery gathers momentum, more buyers are finding themselves in a position where they can afford to own their own home,’ said David Brown, commercial director of LSL Property Services.
‘A whole generation of young buyers were trapped on the side lines of the property market as the economy recovered from the recession, struggling to save for a deposit whilst inflation remained stubbornly high, savings rates were stuck at a historic low, and real wages fell. But the recent increase in high LTV lending options, enabled by Help to Buy, has allowed them a shot at getting on the ladder at long last, and the number of first time buyers has climbed to a seven year high,’ he explained.
‘Any stalling of the mortgage market caused by the introduction of the new mortgage rules has mostly worked its way through the system. Lending is operating on full steam ahead once again, although the end to end process has tightened and elongated,’ he added.
The latest e.surv Mortgage Monitor found that more borrowers are taking out high loan to value loans as the stock of affordable properties is falling. There were 13,256 approvals on properties worth £125,000 or less in July 2014, some 13% fewer than 15,244 a year ago.
The index also shows that the average first time buyer purchase price has risen 8% over the last year and 6.5% over the last three months to £155,844 in July. Simultaneously, average first-time buyer mortgage rates climbed for the fourth consecutive month in July, up from 3.99% in March to 4.19% in July. In the…