First-time buyer numbers reach 2007 levels

The number of first-time buyers in 2016 reached levels not seen since 2007, according to new research.

In its First-Time Buyer Review, the Halifax says the number of home buyers taking their first step on the housing ladder increased by 7.3% in 2016, rising from 312,900 in 2015 to 335,750. This is the highest figure since start of the financial crisis in 2007, when the number of first-time buyers hit 359,900.

However, last year’s figures are still below the pre-crisis levels of 2006, when they reached a peak of 402,800 - 17% higher than the 2016 figures.

Today’s fledgling buyers were found to be more reliant on mortgage finance than their 2006 peers, with 2016 first-time buyers responsible for 49% of all house purchases financed by a mortgage, compared to 36% in 2006. This is the highest level seen since 1996.

The average first-time buyer deposit has more than doubled in the past ten years, reaching £32,321 in 2016, compared to £15,168 in 2006 - an increase of 113%.

However, there is a big regional variation in the results, with the average deposit in London increasing by 276% to £100,445.

The average house price of a first home meanwhile exceeded the £200,000 mark for the first time, hitting £205,170. Whereas in London it was double that at £402,692.

The length of mortgages that first-time buyers take out has also increased. Last year, 60% of those completing on their first mortgage opted for a term of 25 years or longer, whereas in 2006 only 36% borrowed for longer than 25 years.

Martin Ellis, housing economist at Halifax said:

“The number of buyers getting on the housing ladder exceeded 300,000 for the third year in succession – a welcome boost for current homeowners, house builders and the government.

“Continuing low mortgage rates, high levels of employment have supported the market and Government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property.”

Jeremy Duncombe, director, Legal & General Mortgage Club said:

“The first months of the New Year give the Government an excellent opportunity to set the housing agenda for 2017, and we have already seen a number of progressive steps announced that offer real, long-term solutions to tackling the housing crisis.

“However, whilst measures such as the Government’s new Starter Homes Scheme and plans for a set of new garden cities might grab the headlines, we must also ensure that housing policy addresses the needs of people across all tenures, whether they be first time buyers, older homeowners or renters.”

 

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