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First-time buyer affordability and deposits on rise

  • 27/02/2015
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First-time buyer affordability and deposits on rise
First-time buyers have been able to put down bigger deposits and make a better start since wage rises and the Stamp Duty cuts boosted buying power.

Deposits from novice homebuyers rose to £29,127, which is 15% higher than a year ago, according to a report from Your Move and Reeds Rains.

This has also helped drive rising purchase prices for first-time buyer homes, which climbed to a new record. New buyers paid an average of £160,304 in January, up from £143,343 twelve months ago.

The average first-time buyer has saved £900 in tax payouts since the Stamp Duty changes on 4 December 2014 and is now paying £700, down from £1,600. Although house prices continue to rise and buyers are stretching themselves more with loan-to-incomes rising to 75.4% of a first-time buyer’s income, wage rises and deflation are boosting first-timer buying power.

Adrian Gill, director of estate agents Your Move and Reeds Rains, said: “A fusion of economic factors is alleviating some of the financial burden of forming a deposit.

“However, property prices have pushed a new record for first-time buyers, meaning these extra funds are being diverted directly into larger deposits. Putting together a deposit to buy a property remains one of the most arduous tasks for prospective home-buyers, and schemes like Help to Buy are essential to allow the swathes of buyers reliant on higher LTV mortgages to get onto the housing ladder.”

Despite the affordability boost, the number of first-time buyers completing on their first home fell 19% to 21,200 in January 2015.

However, the latest report from chartered surveyor E.surv showed a substantial pick up in higher LTV lending in January, likely to bring rising numbers of first-time buyer completions in the coming months.

Regionally, the average purchase price for first-time buyers in London rose to a new record high of £308,067 in the three months to January 2015 – more than three times the average purchase price in Northern Ireland (£90,241).

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