An RBS survey has recorded eight falls in the last 12 quarters, which means in Q2 2012, first-time buyers’ ability to buy is up 3% on the same period last year.
The index takes into account the cost of essential goods and tax deductions to look at the affordability of homes in the UK.
The report said that an increase in tax thresholds added around £430 to the average first-time buyers’ post-tax earnings, but that rising food, transport and utility costs immediately wiped out almost £200 of that increase.
But falling house prices across the UK helped more young buyers into the market, with their average mortgage repayments falling by £17 a month against 2011.
Potential buyers in Scotland had the best improvement in market conditions, it is now 15% more affordable to buy a home north of the border than it was a year ago. The North East also saw a 9% uptick in the same period.
Affordability in London was down 1% on the second quarter of 2011 while potential first-timers in the East Midlands saw a deterioration of 12%.
Across the UK, first-time buyers now take 37 months to save a 10% deposit, down by a month on 2011 levels.
Fionnuala Earley, consumer economist at RBS, (pictured) said: “At last there appears to be some good news for first-time buyers. Their ability to buy has improved to its best level for three years. Looking ahead, there is more good news to come. The expected modest falls in house prices together with the Funding for Lending Scheme should help to reduce first-time buyers’ borrowing costs.”
“Taking the expected future rise in prices and earnings over the next few years, an average UK first-time buyer household will have to save for 37 months to raise a 10% deposit.
“Although first-time buyers in London will have to save for an average of 47 months, the extra cash that’s now available to them at the end of the month means it should take them four months less to save for a deposit than it did in Q1 2012. First-time buyers in Scotland would have to save for just 30 months.
Graham Felstead of NatWest Intermediary Solutions added: “The slightly rosier picture for first-time buyers is certainly welcome. Not only is affordability expected to ease but it should also help people to save for a deposit more quickly.
“There still exists a perception amongst first-time buyers that they need a minimum deposit of 20% to get a mortgage. With many lenders like ourselves offering 90% LTV mortgages for first-time buyers and supporting the Government’s FirstBuy shared equity scheme we have the opportunity to dispel this myth and help more people to secure their first property.”
