The sum required by first-time buyers (FTBs) when placing a deposit on a house has jumped 5 per cent in a month to an average of £27,500.
In the year to January 2014 FTBs spent an average of £155,832 on their first home, up 16 per cent on January 2013, research from LSL Property Services has found.
However, there has been a marked increase in the availability of high LTV mortgages, with the average available now at 82.3 per cent.
And for the first time in seven months, deposits are growing as a proportion of income. The average deposit represented 75.1 per cent of a first-time buyer’s income in January 2014, up from 74.7 per cent in December 2013.
This was the result of the differing speeds of recovery in the economy. While house prices have raced ahead, wages have been much slower to pick up. The latest ONS statistics showed total pay increased by just 1.1 per cent over the year to December. Factor in inflation, which tracked at 2 per cent over the same time period, and real wages have actually been falling. Deposits are forming a larger proportion of take-home pay.
David Newnes, director of estate agents Your Move and Reeds Rains, part of LSL Property Services group, said: “While the property market has been firing forwards, wage growth has been stuck in the mud of the economic recovery. Prices for first-time buyer properties have been marching steadily upwards, and have now reached a new record.
“The property market has remained accessible to first-time buyers, because an increase in high LTV lending has offset rising prices. This is enabling more first-time buyers to enter the market.”
London and the South East were home to 38% (28,100) of UK first-time buyer transactions – 13,000 in the capital and 15,100 in the South East.
The average deposit was £64,160 in the capital and £39,146 in the South East, considerably higher than in all other UK regions. By comparison, the average first-time buyer deposit was just £13,393 in Northern Ireland and just £13,814 in Wales.
First-time buyers also paid the most for their homes in London. The average first-time buyer purchase price rose to £282,537 – a new record. The cheapest region was Northern Ireland, where the average first-time buyer purchase price was just £87,839.
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