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First-time buyer numbers drop despite lower mortgage costs

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  • 27/11/2015
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First-time buyer numbers drop despite lower mortgage costs
First-time buyer sales plummeted in October, falling by 8.5% compared to July, findings published by Your Move and Reeds Rains show.

Sales totalled 28,100 in October, down from 30,700 three months earlier when July marked the highest number of first-time buyer sales in a month since August 2007.

Completions also dipped between September and October when the number of people who snapped up their first home fell by 1.7%, while also dropping 2.8% since October 2014.

The average first-time buyer deposit now stands at £21,611 which is £457 cheaper than in July. Mortgage rates have also continued to fall, down to 3.34% compared to 3.43% three months earlier.

In addition to both deposit and mortgage payments consuming less of a first-time buyer’s income, the number of higher loan-to-value mortgages available to new borrowers expanded, with 7.3% more of these loans on the market since July.

While the direct costs associated with house purchase were cheaper in October, property prices continued to rise steadily, with the average price totalling £128,225 – 3.6% higher than the same time last year and a 0.3% increase on July’s figures.

London paints an entirely different picture for first-time buyers, where they are required to fork out £83,333 for a deposit on a property worth an average of £328,478. This is in stark contrast to Northern Ireland, which is currently the cheapest place for first-time buyers to live, with a deposit costing just £12,937 for a property coming in at an average of £85,388.

Adrian Gill, director of estate agents Your Move and Reeds Rains, said first-time buyers were likely to be holding off on purchasing a property until the New Year while they put money aside for Christmas.

“Rising property prices are the grit in the otherwise flawless oyster for first-time buyers this month. However, given that the price increases are more sedate than in previous months and the wealth of support available for first-time buyers, this is an obstacle which any determined first-time buyer can easily surmount,” he said.

“Despite the slight slowdown, however, the underlying figures remain strong. Sales totals are still high relative to previous years, with no sign that they’re about to slide back to the doldrums of the 2012 and 2013 period. Moreover, with real-terms wages continuing to outstrip inflation and consumer confidence heading ever upwards, there’s every potential for the property market to kick back up a gear just after the New Year.”

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