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First-time buyer sales hit seven-year high

by: Samantha Partington
  • 22/08/2014
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First-time buyer sales rose to a seven-year high in July as 30,000 fledgling buyers climbed onto the bottom rung of the property ladder.

Research from Your Move and Reeds Rains showed sales in July rose by 25% year-on-year while the average deposit size fell by 10% to £26,642.

Over the same period, the average first-time buyer loan-to-value (LTV) increased to 82.9% from 79.5%.

David Brown, commercial director of parent company LSL Property Services, said: “A whole generation of young buyers were trapped on the side-lines of the property market as the economy recovered from the recession. They struggled to save for a deposit whilst inflation remained stubbornly high, savings rates were stuck at a historic low, and real wages fell.

“But the recent increase in high LTV lending options, enabled by Help to Buy, has allowed them a shot at getting on the ladder at long last, and the number of first-time buyers has climbed to a seven-year high.

The stock of affordable housing is falling forcing first-time buyers to stretch their budgets to snap up more expensive homes.

In July, there were 13,256 approvals on properties worth £125,000 or less, 13% fewer than 12 months ago, according to figures released by surveying firm e.surv.

The average first-time buyer purchase price rose 8% over the last year and 6.5% over the last three months to £155,844 in July.

Simultaneously, average first-time buyer mortgage rates climbed for the fourth consecutive month in July, up from 3.99% in March to 4.19% in July.

In the last three months they have climbed 0.14 percentage points.

As a consequence, first-time buyer mortgage repayments have risen as a proportion of income. Over the last three months they have climbed from 21% of a first-time buyer’s income to 22.6%. 

Brown said: “The urgency among first-timers to lock into cheap fixes is propelling activity at the bottom of the market.

“Fixed deals have already started getting more expensive, as banks raise rates in anticipation of a potential interest rate rise.”


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