First-time buyer sales at seven-year high, but you’ll need £26,000 to get on the ladder

22nd August 2014


The number of first-time buyers getting a foot on the ladder has risen to a seven-year high but they will have to spend £9,000 more than last year to secure a property.

Figures from LSL Property Services shows there were 30,000 first-time buyers sales in July, a 25% leap on last year and the highest number of monthly first-time buyers since August 2007.

Although deposits first-time buyers are putting down are 10% lower than last year, they are still having to find an average of £26,642 to secure a home.

Despite the fall in the deposits being put down the average first-time buyer will have to pay £9,000 more for the average home than they would last year after a steep rise in property prices. They will also have to spend more of their wages to pay back their loans as the average first-time buyer loan-to-value (LTV) ratio has increased from 79.5% to 82.9%.

The ability to pay a lower deposit but buy a more expensive home has been made possible by the government’s Help to Buy scheme, which sees those with 5% deposits given an equity loan or mortgage guarantee by the government to ensure they can buy.

David Newnes from LSL Property Service, said the Help to Buy scheme has helped buyers onto the ladder and encourage lenders to provide high LTV mortgages – for example, 95% mortgages.

‘A whole generation of young buyers were trapped on the sidelines of the property market as the economy recovered from the recession, struggling to save for a deposit while inflation remained stubbornly high, savings rates were stuck at a historic low, and real wages fell,’ he said.

‘But the recent increase in high LTV lending options – enabled by Help to Buy – has allowed them a shot at getting on the ladder at long last.’

While recent signs show a cooling in the housing market, Newnes said the first-time buyer market was ‘still active’. The average first-time buyer has seen their income increase from £35,843 a year ago to £37,000 in July.

‘As the economic recovery gathers momentum, more buyers are finding themselves in a position where they can afford to own their own home,’ he said.


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