First time buyer numbers reach seven-year high to 326,500 in 2014

The number of first time buyers of homes in the UK rose 22% to 326,500 in 2014, a seven-year record, according to the Halifax First Time Buyer Review published on Tuesday.

The surge occurred despite average house prices rising by 9% to £172,000.

First-time buyers accounted for 46% of all house purchases made with a mortgage in 2014, compared to 44% in 2013.

Improved competition for mortgages plus record-low interest rates helped push down the average cost of a deposit for a first-time buyer by 7% to £29,218, the report informed.

In the first half of 2014, house prices rose, partly due to the Government’s Help to Buy scheme. However, in the second half stricter limits were imposed on borrowers by the Bank of England in an attempt to cool the market.

McKinlay on first time buyers

Mortgage affordability has improved, said Mr. McKinlay.

Mortgages Director at Halifax, Craig McKinlay, said:

“First-time buyers are vital for a properly functioning housing market. Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time, contributing to the significant increase in the number of first-time buyers in the past two years.”

Mr. McKinlay added that in recent years mortgage affordability in the UK has improved. The proportion of disposable earnings devoted to monthly mortgage payments in Q3 2014 stood at 32%.

Experts predict the housing market will pick up in 2015 as wages accelerate after years of below-inflation increases.

First time buyer

As wages accelerate, the number of first-time buyers in 2015 is expected to rise.

The authors of the report also wrote that the stamp duty reforms announced by Chancellor George Osborne in December should boost the market, as well as reducing how much tax the average first time buyer pays by about £781.

The average first-time buyer was aged 30 years in 2014, compared to 29 in 2013, while in London the average age is 32.

The least affordable region in the UK for first-time buyers was London, where the average price of a home was £323,333. More than one-quarter of all local authority districts in the UK are today beyond the reach of the average first-time buyer, based on a ratio of earnings to house prices. In 2007, just 5% of districts were unaffordable.

The most affordable region in the country was Northern Ireland, where the average house was sold for £80,703. Seventy percent of the ten most affordable areas were in Scotland.

Governor of the Bank of England, Mark Carney, said in December he believed that the stamp duty reform would likely give the UK’s housing market a small boost, and also help most home buyers.