FIRST-TIME BUYERS TO TOP 350,000 FOR SECOND YEAR RUNNING

First-time buyers reached an estimated 353,436 in 2019 whilst marginally up from the 353,130 recorded last year it is still the highest level since 2007.

Despite a lack of distinct growth in the last 12 months, the overall trend is that figures are gradually approaching pre-financial crisis, with the number of people buying their first home with a mortgage exceeding 300,000 in five of the last six years.

The data shows that almost twice as many first-buyers secured a mortgage in 2019 as at the start of the financial crisis in 2008 (191,040) with those entering the property market now accounting for more than half (51%)[i] of all homes purchased (with a mortgage) this year. In 2008 this share was just 38%.

The Society has based its market analysis on market-wide first-time buyer data to October 2019, with November and December estimated by the Society.

With an average price of £415,618 London is the most expensive region for first-time buyer homes, followed by the South East (£264,097). That said, they are the most popular regions for first-time buyers accounting for 12% and 20% of sales respectively – significantly higher than other areas. More so, first-time buyers make up 60% of all house purchases (with a mortgage) in London even though the average deposit put down is £131,000.

Strategic Economist Nitesh Patel said:

Even though the number of first-buyers has stayed pretty much the same as last year, it is still encouraging to see first-time buyers top 350,000 for the second year in a row. They also represent over half of all homes bought with a mortgage, meaning the first-time buyer mortgage market share is at its highest since 1995, when they bought 53% of all mortgage-financed homes.

First-time buyer numbers may now be plateauing as property prices have grown at a faster rate than salaries over the past 12 years. This means larger deposits are needed to get on to the property ladder, leading to challenges and barriers to homeownership, which are most pronounced in London and the south-east.

In recent years first-time buyers have been helped by strong competition driving mortgage rates down to near-record lows, making borrowing more accessible. More mortgage lenders offering 95% loan-to-value mortgages, which reduces the need for a higher deposit. Home loans with terms of up to 40 years are becoming increasingly popular as first-time buyers look to lower their monthly mortgage repayment.

Also Government schemes such as Stamp Duty relief, Help to Buy equity loans and Help to Buy ISAs will have made an impact. This combination of factors has made buying a home more accessible in recent years.

This has seen the first-time buyer market bounce back from the financial crisis and perform better than other sectors, such as the home-moving and buy-to-let markets. However as these figures show the market may have now reached its peak and buying your first home still remains tough for many.

 

The Yorkshire is offering tips to would be first- time buyers to help prepare for purchasing their first homes:

  1. Work out your finances
  2. Before you start looking at properties, review your personal finances. Specifically around the savings you have and debts you may be paying off.

    If you’re concerned about your current monthly outgoings, you should try to reduce these at least six months before making a mortgage application. It’s also a good idea to check your credit report and make sure all the information shown is correct, before applying for a mortgage. This is particularly important when making sure you appear on the electoral roll for your current address and checking any records of loans and credit cards.

  3. What can you afford?
  4. Once you are happy with your finances, try out a mortgage cost calculator, available on mortgage lender websites or independent money advice sites. This is an easy way to help you work out what you can afford and how much you’d be able to borrow. Don’t forget about the deposit you have/can save (usually at least 5-10% of the purchase price as a minimum) and legal costs and the price of a valuation and a survey all need to be considered.

  5. Speak to a mortgage adviser or broker
  6. A mortgage adviser will look at your income, any debts you have and your deposit to make an assessment on how much you can borrow.  They will also help explain how a mortgage works and the things you need to consider before buying your first home.

    It’s important to do this at the start of your house hunt, so your search is realistic. You should also be able to get a mortgage offer in principle, which shows sellers that your finances are already in place making you an attractive buyer.

  7. Choosing a property
  8. When choosing where to live it’s worth making a list of what is important to you. Consider things like number of bedrooms, parking (on or off-street) and outdoor space. Is location more important than the property? It may be key to look at local amenities such as schools, shops and transport links too.

  9. Be patient
  10. House purchases rarely stick to the expected time frames. It might take you several months or years to save the required deposit as well as finding your ideal property, and then the transaction itself can take a while as well. This will probably be one of the biggest financial commitments you’ll make in your lifetime, so it’s important not to rush.

 

Table 1 Number of First-time buyers 2006-2019

Year

Number of first-time buyers

Year-on-year change

Share of all mortgage house purchases

2006

400,870

32%

35%

2007

357,590

-11%

36%

2008

191,040

-47%

38%

2009

193,940

2%

40%

2010

193,590

0%

38%

2011

187,990

-3%

40%

2012

211,920

13%

43%

2013

258,700

22%

46%

2014

300,370

16%

48%

2015

297,520

-1%

47%

2016

329,000

11%

51%

2017

345,920

5%

51%

2018

353,130

2%

51%

2019*

353,436

0%

51%

 

[i] See Table 1 - Based on UK Finance data to October 2019, with November and December 2019 estimated by Yorkshire Building Society, in line with previous first-time buyer patterns. Actual figures due to be available in February 2020.

All information correct at time of publication.

W01-20

 

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