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Affordability worsens for first-time buyers – Halifax

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  • 27/01/2020
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Affordability worsens for first-time buyers – Halifax
The costs to first-time buyers stepping onto the property ladder have increased over the past year, data from Halifax has shown.

 

The average UK first-time purchase price rose by nine per cent to £231,455 while the average deposit increased by seven per cent to £46,187 year-on-year, the lender said. 

London saw the biggest increase in the price paid by first-time buyers over the last 12 months, up by £27,764 or seven per cent.   

Meanwhile, the greatest percentage growth came in the North West and Yorkshire and Humber regions, both up by nine per cent representing £13,475 and £13,132 respectively. The smallest increase came in East Anglia, up by two per cent or £4,528. 

Average deposits for first-time buyers in London were up by two per cent from £107,869 to £109,885.

Other areas of the country saw greater growth, with average first-time buyer deposits growing by 13 per cent in the North from £21,263 to £24,091. East Anglia was the only region to see a fall, down by four per cent from £44,828 to £43,188. 

 

FTB numbers stable 

Despite increasing costs, the overall number of first-time buyers in 2019 remained stable, with a one per cent increase from 353,130 in 2018 to 356,767 in 2019. This means first-time buyers still account for more than half of all home purchases.  

Northern Ireland saw the biggest increase in the number of first-time buyers in percentage terms, up by six per cent year-on-year from 10,430 to 11,013. London remained broadly flat, with numbers up two per cent from 40,960 to 41,712. The South West was the only region to record a fall, down four per cent from 29,430 to 28,378. 

 

Affordability 

Burnley in the North West is now the most affordable area for local first-time buyers – calculated by comparing average earnings to average house prices – with a ratio of 3.1. This replaces East Ayrshire in Scotland.  

The vast majority of the top 10 most affordable areas are in Scotland and Wales including North Ayrshire at 3.3 and Merthyr Tydfil at 3.4, and Pendle in the North West also made the table with an affordability measure of 3.6.  

The list of least affordable areas in the country are dominated by London, with Hackney recording a house price to earnings ratio of 12.1, followed by Brent at 11.6 and Lambeth at 11.1. Oxford, with an affordability measure of 10.3 was the only place outside London to make the top 10.  

Over the decade, just 10 areas have become more affordable for first-time buyers.

  

Decade of change  

As the economy has recovered from the crash the volume of first-time buyer transactions surged by 84 per cent over the decade, from 193,940 to 356,767.

It now accounts for 51 per cent of all home purchases, up from 39 per cent ten years ago, with the average price paid increasing 67 per cent from £138,633 to £231,455.

The average first-time buyer price in London rose 104 per cent from £222,107 to £453,385. Meanwhile, Northern Ireland saw the lowest growth, up 12 per cent from £122,699 to £136,850. 

The average deposit needed by a first-time buyer in London grew 41 per cent from £77,977 to £109,885, while in Northern Ireland, it fell by 26 per cent from £34,356 to £25,317.  

The national average first-time buyer deposit over this time grew by 19 per cent from £38,900 to £46,187.  

Russell Galley (pictured), managing director at Halifax, said: “While price growth in the overall housing market has been modest in recent years, the level of inflation facing first-time buyers is greater, which compounds the challenge in raising bigger deposits.”

He noted that it was reassuring that the overall number of new buyers getting on the ladder remained stable.  

“However, it’s clear that more needs to be done to address more fundamental long-term issues, not least the shortage of new, affordable homes being built, he added. 

 

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