The average first time buyer purchase price climbed 16% over the year to January 2014, hitting a record high of £155,832, according to the most recent figures released by LSL Property Services. This represents a monthly purchase price increase of 3.3%, and what’s more, for the first time in over half a year, the proportion of a first time buyer’s income that their deposit represents is increasing. The average deposit represented over three quarters of a first-time buyer’s income in January 2014. This means that the average deposit paid by a first time buyer is £27,500 deposit.
David Newnes of LSL Property Services group commented that: “Prices for first-time buyer properties have been marching steadily upwards, and have now reached a new record. The property market has remained accessible to first-time buyers, because an increase in high LTV lending has offset rising prices. This is enabling more first-time buyers to enter the market.”
More first time buyers take the plunge
The number of first-time buyer transactions is over 30% higher than it was in January 2013, suggesting that the second phase of the Government’s Help to Buy
scheme, launched in autumn 2013, is encouraging first time home purchases. High loan to value (LTV) borrowers – who are typically first time buyers – made up 14% of those taking out mortgages in January 2014, up from 12% in December 2013.
Newnes commented on the increase, saying: “As first time buyer house prices continue their upward climb, Help to Buy is needed more than ever to keep the market accessible to all.”
However, he cautioned against seeing Help to Buy as a panacea for the recovery of the housing market, adding: “The market needs more than that. Far more house-building must come hand-in-hand with more high LTV lending. More building will ensure Help to Buy doesn’t become a permanent crutch to the market; we need to increase our stock of affordable homes and reduce the competition between buyers to ensure a sustainable recovery."
Your home may be repossessed if you do not keep up repayments on your mortgage.