The number of property transactions to of first-time buyers in the first quarter of 2015 dropped to the lowest level in two years, according to the latest First Time Buyer Tracker from Your Move and Reeds Rains.
There were 60,900 first-time buyer transactions from January to March this year, the lowest number recorded since the first three months of 2013 (51,000). And this despite the record-low interest rates on the market and the fact that first-time buyers now are taking out mortgages at the lowest rates in four years. The average rate was 3.64 per cent in March.
The average first-time buyer deposit now stands below £25,000, while loan-to-values (LTVs) on first-time buyer mortgages are at their second-highest level in four years, at 83.5 per cent.
Adrian Gill, director of estate agents Your Move and Reeds Rains, comments:
“Cheaper mortgages and a steadier property market should be boosting first-time buyers. Enthusiasm for the idea of homeownership is as strong as ever and it’s a great time to get on the ladder according to these headline fundamentals. Yet for many thousands of would-be new buyers there is still a very real difficulty in matching their personal finances to a home they can afford.
“Some might also point to election uncertainty and that could be a partial brake. However, the real bottle-neck is a much more serious and longer-term problem. First-time buyer numbers have flat-lined for two years because a lack of new homes is catching up with the property market. It’s not the election itself that matters most – it’s the next five years and the decades after that which will count. Even now, with the extra support of record low mortgage rates and Help to Buy, the property ladder seems to be missing several rungs. Politicians need to get serious about building more homes.”
Regional view
The average purchase price for a first-time property in London rose to £304,205 in the first quarter of 2015 from £283,595 in the last quarter of 2014.
Prices in the South East increased to £205,941 from £199,895 and property values in the East climbed to £172,847 from £159,218.
The gap between south-eastern regions near London and other parts of the UK is mirrored in the differences between average deposits paid in those regions.
Average deposits in London (£67,103) were five times higher than those in Northern Ireland (£12,522). Equally the average deposit put down by first-time buyers on a home in the East of England was over double that put down by equivalent buyers in the South West, Wales and Yorkshire & the Humber.
“Beyond the obvious pre-eminence of London, a new trend is emerging. Prices in the East of England seem to be pulling away from other parts of the UK and joining London and the South East as very expensive places to live. A number of factors could be causing this, notably among them the growth of Cambridge City as a tech and Life Sciences centre, attracting young professionals with more money than other first-time buyers. However – unless new homes can be built across the UK, other regions will soon start to join the list too,” Adrian Gill said.
