More first-time buyers got on the housing ladder last year than any other time since 2007, but prospective homeowners now need a deposit of over £32,000.
According Halifax, the number of first-time buyers is estimated to have reached 335,750 in 2016.
It is the third successive year first-time buyer numbers have totalled over 300,000 and it is the highest level since the start of the financial crisis in 2007.
After reaching an all-time low of 192,300 in 2008, the number of homebuyers getting on to the first rung of the property ladder has grown by 75% to its current level.
However, it is not all good news. The average first-time buyer deposit has more than doubled over the past decade from £15,168 in 2006 to £32,321 in 2016 – an increase of 113%.
In London it is even worse, with deposits for first-time buyers increasing four-fold to £100,000.
Halifax said that the average house price paid by first-time buyers was £205,170, while in London it is £402,692.
With rising house prices there is also a growing trend for longer mortgage terms above the traditional 25-year term.
While 36% of first-time buyers took out a mortgage of over 25 years in 2006, this figure has now shot up to 60%.
The number of first-time buyers opting for a mortgage of 30 to 35 years has also grown in the past decade from 11% to 28%.
The average age of a first-time buyer has increased from 29 in 2006 to 30.
Regionally, the average age of a first-time buyer is highest in London, at 32-years-old. The youngest first-time buyers are 27 in Carlisle in Cumbria and Torfaen in south Wales.
Martin Ellis, housing economist at Halifax, said: “First-time buyers play a crucial role in the housing market, and each transaction has an impact further up the chain, as well as helping to drive levels of housebuilding.
“The number of buyers getting on the housing ladder exceeded 300,000 for the third year in succession – a welcome boost for current homeowners, house builders and the government. Continuing low mortgage rates, high levels of employment have supported the market and Government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The Halifax’s findings are good news in terms of the increase in number of first-time buyers but are also indicative as to what parents and grandparents put themselves through so that they can afford those deposits – with more than £100,000 required in London.
“If the housing market is going to function properly, as the government has told us so many times it should, then we need to protect first-time buyers. First-time buyers are the life blood of the market as they tend to buy at the bottom and trade up whereas investors buy at one level and stay there.
“Although lenders are supposed to be providing support via Help to Buy now that the mortgage guarantee element has been withdrawn, on the ground we are finding it is not happening in all cases and more flexibility on lending criteria at higher loan-to-values is required.”
