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Rising prices mean fewer first-time buyers

  • 26/03/2002
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The number of first-time buyers in the housing market has slumped since the mid-1980s due to substan...

The number of first-time buyers in the housing market has slumped since the mid-1980s due to substantial increases in house prices.

The finding was revealed by new research from Halifax which also showed that the South East continues to be the worst-hit area, with an average first-time buyer in London often requiring a deposit of £34,000 to initially buy.

Gary Styles, head of group economics at Halifax, said: ‘House prices have risen very rapidly in parts of the UK over the past few years. As a result, many first-time buyers in the South are finding it very difficult, if not impossible, to get onto the property ladder. Affordability is not an issue in the rest of the country.’

Areas in the north of the country require substantially lower amounts to get on the ladder with an average deposit tallying £6,000 ‘ almost a fifth of that needed in London.

The widening gap between affordability in the North and South continues to widen with the ration of average house prices in relation to average earnings in London being 5.0, compared with 2.4 in the North West.

The cost of housing and the large deposits required also appear to be deterring first-time buyers until a later stage in their life. The average age of a first-time buyer has increased from 29 in 1974 to 34 in 2001.

Styles said: ‘The profile of the first-time buyer is changing. They are older and have a larger deposit than their counterparts in the late 1980s. This change reflects wider social developments.’

First-time buyers are receiving little respite from the Government with mortgage tax relief being phased out and Stamp Duty increasing.

In 1988, mortgage tax relief saved an average first-time buyer £954, but this is no longer available. The average first-time buyer now pays £781 in Stamp Duty, compared with £429 in 1988.


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