First time buyers numbers remained up in 2015, new data shows

The number of first time buyers in the UK remained buoyant in 2015 at just over 300,000 for a second year in a row, according to new data.

First time buyers accounted for almost half of all house purchases made with a mortgage in 2015 and more than a quarter are now opting for a 35 year mortgage, according to the annual first time buyer review report from the Halifax.

Overall it show that number reached 310,000 and the lender says that although this represents a marginal decline of 0.5% from 311,700 in 2014, the number has grown by 60% since 2011, from 193,700 to 310,000. T

It also says that the marginal decline in first time buyers is in line with general residential house purchases, and is partly due to lack of supply.

The data also shows that the average price paid by first time buyers increased by 10% in 2015 from £172,563 to £190,180, taking the price above the previous peak in 2007 of £174,994 for the first time.

The average deposit paid by a first time buyer at £32,927 was 13% higher than a year ago and 88% higher than the average deposit in 2007 which was £17,499. The report says that is was the higher house prices paid by first time buyers during the year has resulted in an increase in the average deposit paid.

In the South East the average deposit paid rose by 24% in the past year, from £35,582 to £44,024 while the highest is in Greater London at £91,409, some five and a half times more than the lowest which was £16,578 in Northern Ireland.

Whilst a mortgage term of 25 years has been the norm for some time, many first time buyers are increasingly taking out mortgages where payments are spread over a longer period. In 2007 the proportion of first time buyers taking up a 35 year mortgage was 16% bit in 2015 that grew to 26%.

Over the same period, the share of mortgages with a 20 to 25 year term dropped from 48% to 30%.

‘For the second year in succession, the number of buyers getting on the first rung of the housing ladder has reached 310,000. Although the average price of the typical first time buyer home has grown by 10% in the past year, the number of buyers taking that first step onto the housing ladder has been supported by favourable economic conditions; namely, record low mortgage rates, rising employment and real pay growth,’ said Craig McKinlay, mortgages director at the Halifax.

The research suggests that first time buyers are an increasingly important part of the housing market and accounted for 46% of all house purchases made with a mortgage in 2015, the same as in 2014. However, this share has grown from 36% at the start of the housing downturn in 2007.

Based on the average price paid by first time buyers, most regions have benefited from the Stamp Duty changes from December 2014. The largest saving is made by first time buyers in London with someone buying at the average first time buyer price of £367,990 now paying £8,399 in stamp duty fees compared to £11,039 before the change, a difference of £2,640.

Buyers in most of the northern regions, as well as those in Scotland, are making substantial savings of over £1,000. With an average house price below the lower threshold of £125,000, typical first time buyers in the North, Wales and Northern Ireland still pay no stamp duty.

‘Whilst affordability has improved since 2007, in many parts of the country the ratio of the average house price to earnings is still significantly above the long term average of four. This is a concern as it could prevent many potential buyers from entering the market,’ McKinlay pointed out.