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In the first quarter, 58 per cent of Connells valuations were for first time buyers, up from 42 per cent in the same period of 2008. In the second quarter, as other buyers began to follow suit, first time buyers fell to 53 per cent of all transactions, and by July, this had dipped to 46 per cent. The recent decline in the proportion of first time buyers comes against a backdrop of an overall increase in the number of house purchases. Home movers have increased their share from just 35 per cent of mortgage valuations to 44 per cent by July. There is heightened activity on the buy to let front too, where investors have increased from just one in fourteen buyers earlier this year to one in ten in July.
The strength of first-time buyer activity comes against a strong headwind of tough lending criteria which have made it difficult for first timers to access credit. Significant deposit requirements remain and higher affordability and credit scoring thresholds are undoubtedly preventing many from obtaining mortgage finance.
Data from the Department for Communities and Local Government shows house prices are more affordable now than at any time since 2003. This has proved irresistible to some first timers.
The trends in Connells data suggest that housing transactions should have increased to almost 40,000 by June, with a similar number in July, up 53 per cent from the record low in January.
Ross Bowen, group mortgage director for Connells said: “First-time buyers are having a hard time when it comes to obtaining finance but this hasn’t stopped them hunting for bargains. For first-timers house prices are cheaper than they have been for years, and there is pent up demand.
“The overall numbers of houses changing hands are recovering, which combined with rising house prices over the last five consecutive months is encouraging. However, funding constraints remain a significant barrier to any step change in housing transaction levels.
“First time buyers are crucial to the long term health of the market and continuing to support their entry to home ownership must remain a top priority for us all.”
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