A total of 37,300 first time buyers bought a home in London in 2012, up from 32,400 in 2011. On a quarterly basis, first time buyer activity increased, while home mover lending fell and remortgage lending remained stable, the data also showed.
In the fourth quarter, a total of 10,200 first time buyers bought their first home in London, a 4% increase compared to the previous quarter, and up by 17% on the fourth quarter of 2011. This represented a larger boost compared to the UK overall where lending to first time buyers increased by 14% compared to the fourth quarter of 2011.
It was also the largest single quarter for first time buyer activity since the last quarter of 2009 when activity was boosted prior to the end of the previous stamp duty holiday.
However, first time buyer affordability in London remained tighter than in the UK overall. First time buyers in London borrowed an average of 3.59 times their income in the fourth quarter and their mortgage payments typically consumed 21.2% of their income. This compares to an average income multiple of 3.26 and 20% of income taken by mortgage payments for all first time buyers in the UK.
First time buyers in London also put down larger deposits than in the UK overall. The average loan to value ratio remained at 75% in the fourth quarter and 2012 overall, compared to 80% in the UK.
Half of all first time buyers in London bought properties priced between £125,000 and £250,000. This was a similar proportion to the UK at 47%, but first time buyer activity was significantly different for properties priced below £125,000 and above £250,000.
While in the UK around 40% of first time buyers typically bought properties for less than £125,000, in London only 4% of first time buyer purchases were in this band, with the remainder at above £250,000.
At the other end of the scale, 8% of first time buyers in London bought properties valued at more than £500,000, compared to just 2% of these borrowers in the UK.
