The proportion of towns and cities across the UK that are affordable for first-time buyers has risen to its highest level since 2003, according to the latest Halifax First Time Buyer Review.
The average house price paid by a first time buyer in June 2011 was affordable for someone on average earnings in 48 per cent of all local authority districts (LADs). This is the highest proportion of housing affordable for first time buyers in eight years, and compares with 40 per cent in 2010 and just 6 per cent in 2007.
80 per cent of all LADs in the North of the UK are affordable for first-time buyers: 10 times the proportion of affordable areas in the South (8 per cent). The North East is the only UK region where all LADs are affordable for FTBs. In contrast, London is the only region with no affordable areas for first time buyers on average earnings.
Despite the improvement in affordability, the number of FTBs has decreased slightly over the past year in line with the market. Halifax estimates that there were around 86,000 first-time buyers in the first half of 2011: a fall of 10 per cent from the same period in 2010 and close to half the number in the first six months of 2007 (181,500).
FTBs put down an average deposit of £27,719 in the first half of 2011, equivalent to 21 per cent of the property price. There are signs that more products for buyers with smaller deposits are being made available. This is partly reflected in an 8 per cent fall in the average deposit from £30,251 since the same period in 2010.
Halifax’s recent Generation Rent report revealed that many potential FTBs have given up on the possibility of getting on the housing ladder. 77 per cent of non-homeowners still aspire to own their own home, but half (46 per cent) believe that Britain is becoming a nation of renters because of the obstacles facing first time buyers. 55 per cent believe first time buyers are too scared of being turned down to apply, despite the fact that Halifax accepts eight out of 10 mortgage applications from first time buyers.
“It is encouraging that housing affordability for first time buyers in general has improved significantly over recent years, as a consequence of the marked falls in both house prices and interest rates since 2007. However, there is a distinct North-South divide within this improvement as the majority of affordable areas are in the North.”
