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First-time buyers need extra £10k for deposit after Covid

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  • 25/01/2021
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First-time buyers need extra £10k for deposit after Covid
The typical deposit needed by buyers for a first home increased by more than £10,000 in 2020.

 

The average amount put down by a first-time buyer in 2020 was £57,278, compared to £46,449 the year before, a rise of over 23 per cent, according to research by Halifax.

It comes as the average price paid by a first-time buyer in the UK last year was £256,057, up by £22,939 from £233,118 a year earlier.

London saw the biggest monetary increase in the average price paid over the last 12 months, up by £33,486 from £455,611 to £489,098.

Overall the number of first-time buyers fell by 13 per cent last year, according to analysis by Halifax.

But this was largely during the first half of 2020 as the property market closed. In the second half, activity bounced back with transactions down two per cent compared to the same six months of 2019.

First-time buyers made up around half of homes bought with a mortgage – a similar level to the previous year.

Regionally Northern Ireland saw the biggest fall in first-time buyers with a 23 per cent decrease, while London had the smallest reduction with a dip of six per cent.

Russell Galley, managing director of Halifax, said: “Whilst these figures confirm the almost inevitable fall in the overall number of first-time buyers in 2020 – with the entire housing market effectively shuttered during the first national lockdown – they also underline just how strong the bounce back was in the second half of the year.

“Despite the obvious challenges presented by soaring house prices, not least the need to raise an even bigger deposit, first-time buyers still accounted for half of all home purchases, a reassuring statistic given their overall importance to the market.

“However, with the economic impact of the pandemic likely to be felt most keenly by the young and those in lower-paid jobs, the need to prioritise improved housing availability and affordability for all those looking to make that first step onto the property ladder becomes ever greater.”

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