First time buyers jump by 22% to 265,000 in 2013 but numbers still well below pre-crash average

6th January 2014

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The number of first time buyers grew by 22% last year, the largest annual rise since 2001 according to the annual Halifax First Time Buyer Review. This is the second consecutive annual increase following a 13% rise in 2012. There were an estimated 265,000 FTBs in 2013, up from 218,000 in 2012.

While this was the highest annual total since 2007, it was still nearly 30% lower than the annual average between 2003 and 2007 which averaged 370,800. First time buyer numbers increased their share of all house purchases made with a mortgage, now accounting for 44%, up from 40% in 2012.

The bank also says that mortgage affordability has improved significantly in recent years. The proportion of disposable earnings devoted to mortgage payments by a first-time buyer stood at 30% in the third quarter of 2013 Quarter 4. This is a substantial improvement since summer 2007 when this figure reached a peak of 50%. Record low mortgage rates have been a major contributing factor driving this improvement.

Halifax says there has also been an increase in the proportion of areas that are affordable for FTBs since 2007. In a third (31%) all of local authority districts (LADs) in the UK the average house price paid by a first-time buyer in November 2013 was affordable for someone on average earnings – based on the ratio of the average house price to earnings being below the long-term average of 4.0.

This compares to the peak of the market in 2007 when just 5% of local authority districts were affordable. The average price paid by FTBs in 2013 was 10% lower than it was in 2007.

Some 45% of all FTB purchases in 2013 were below the £125,000 Stamp Duty threshold. A similar proportion (46%) of properties bought by FTBs were priced between £125,000 and £250,000. The overwhelming majority (98%) of FTBs in London bought homes above the £125,000 threshold, followed by the South East (87%), and South West (74%)

Deposits

The average FTB deposit in 2013 stood at £30,943; 11% higher than in 2012 (£28,001) and £10,502 (77%) higher than in 2007 (£17,499) (see Table 4).

FTBs in Greater London put down the largest average deposit, at £56,183. FTBs in the North East put down the smallest average deposit, at £15,862.

Prices

The average price paid by a FTB is highest in Greater London (£280,915); almost two and a half times that in the North East (£105,748) where the average price paid by a FTB is the lowest (see Table 4).

Age

The average age of a FTB is 30 years; up from 29 in 2011. The average age of a FTB is highest in London, at 31 years old.

Martin Ellis, housing economist at Halifax, says: “The number of first-time buyers is estimated to have grown by a fifth in 2013, the largest annual increase in more than a decade. Low interest rates, improvements in consumer confidence and Government schemes, such as Help to Buy, all appear to have contributed to the rise in the number of first time buyers.

“However, many potential first-time buyers continue to find raising the necessary deposit a problem. The Help to Buy mortgage guarantee scheme should enable more buyers to get on to the property ladder with smaller deposits. Continuing pressure on household finances during the next 12 months will no doubt remain a constraint.”

 

Table 1: Number of First-Time Buyers – UK

Number of First-Time Buyers Annual % change FTBs as % of all House Purchase Loans
2002 531,800 6% 38%
2003 369,600 -31% 30%
2004 358,100 -3% 29%
2005 363,800 2% 37%
2006 402,800 11% 36%
2007 359,900 -11% 36%
2008 192,300 -47% 37%
2009 196,600 2% 38%
2010 198,600 1% 37%
2011 193,000 -3% 38%
2012 218,000 13% 40%
2013* 265,000 22% 44%

Source: CML

*Halifax estimate

 

Table 2: % of affordable LADs for First-Time Buyers by Region, 2007 and 2013*

2007 2013
Affordable Unaffordable Affordable Unaffordable
% %
North East 0% 100% 69% 31%
Wales 0% 100% 75% 25%
Yorkshire and The Humber 12% 88% 76% 24%
North West 4% 96% 70% 30%
East Midlands 11% 89% 52% 48%
Scotland 31% 69% 46% 54%
West Midlands 0% 100% 13% 88%
South West 0% 100% 0% 100%
East of England 0% 100% 0% 100%
South East 0% 100% 0% 100%
London 0% 100% 0% 100%
United Kingdom 5% 95% 32% 68%

Source: Halifax. Northern Ireland has been excluded from the regional analysis

*2007 refers to 12 months to December. 2013 refers to 12 months to November.

 

Table 3: First-Time Buyer Purchases by Stamp Duty Thresholds by Region

% of FTB Purchases by Stamp Duty Threshold – January to November 2013
<£125k £125k-£250k <£250k >£250k
North 76% 23% 99% 1%
Yorkshire and The Humber 70% 29% 99% 1%
North West 67% 31% 99% 1%
East Midlands 65% 33% 99% 1%
West Midlands 58% 40% 98% 2%
East Anglia 37% 59% 96% 4%
Wales 69% 30% 99% 1%
South West 26% 70% 96% 4%
South East 13% 75% 88% 12%
Greater London 2% 58% 60% 40%
Northern Ireland 85% 14% 100% 0%
Scotland 68% 30% 98% 2%
United Kingdom 45% 46% 91% 9%

Source: Halifax.

Table 4:  First-Time Buyers: Average Price, Loan and Deposit by Region, 2013

Average House Price (£s) Average Mortgage Average Deposit (£s) Deposit as % of purchase price
(£s)
North 105,748 89,886 15,862 15%
Yorkshire and Humberside 112,147 95,183 16,964 15%
North West 115,618 98,127 17,491 15%
East Midlands 121,595 97,576 24,019 20%
West Midlands 129,278 97,213 32,065 25%
East Anglia 149,370 119,670 29,700 20%
Wales 113,932 91,146 22,786 20%
South West 159,319 131,810 27,509 17%
South East 195,259 165,957 29,302 15%
Greater London 280,915 224,732 56,183 20%
Northern Ireland 92,778 78,861 13,917 15%
Scotland 114,781 92,831 21,950 19%
UK 156,701 125,758 30,943 20%

Source: Halifax 12 months to November, CML

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