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Number of towns in UK affordable to first time buyers is at its highest since 2003

The average house price paid by a first time buyer in June 2011 was affordable for someone on average earnings in 48% of all local authority districts (LADs). This is the highest proportion of housing affordable for first time buyers in eight years, and compares with 40% in 2010 and just 6% in 2007.

But there is a North South divide as 80% of all LADs in the North of the UK are affordable for first time buyers, ten times the proportion of affordable areas in the South at just 8%. The North East is the only UK region where all LADs are affordable for first time buyers.

In contrast, London is the only region with no affordable areas for first time buyers on average earnings.

Despite the improvement in affordability, the number of first time buyers has decreased slightly over the past year in line with the market. Halifax estimates that there were around 86,000 first time buyers in the first half of 2011, a fall of 10% from the same period in 2010.

The research shows that first time buyers put down an average deposit of £27,719 in the first half of 2011, equivalent to 21% of the property price. There are signs that more products for buyers with smaller deposits are being made available. This is partly reflected in an 8% fall in the average deposit from £30,251 since the same period in 2010.

Nationally, the average house price paid by a first time buyer has fallen by 4.1%, some £5,732, over the past year from £140,883 to £135,091. Over the past decade, first time buyers property prices have risen by 76% from £76,855 in 2001 to £135,091.
The research also found that the average age of a first time buyer is 29 years old. Those in Yorkshire and Humber and Wales are, on average, the youngest at 27 while regionally, the average age is highest in London, at 31.

Some 95% of first time buyers were exempt from paying stamp duty during the first half of 2011. Nearly four in ten, 38%, of first time buyers have not paid any stamp duty as a consequence of the temporary increase in the threshold from £125,000 to £250,000.
Those getting onto the property ladder in the South East have benefited most from the change in the threshold with 73% of first time buyers in the region exempt from paying stamp duty as a result of the temporary increase.
‘It is encouraging that housing affordability for first time buyers in general has improved significantly over recent years, as a consequence of the marked falls in both house prices and interest rates since 2007. However, there is a distinct North-South divide within this improvement as the majority of affordable areas are in the North,’ said Suren Thiru, housing economist at Halifax.

According to Stephen Noakes, commercial director, Halifax Mortgages, the significant challenges in raising a deposit and widespread pessimism about the chances of being accepted for a mortgage are clearly preventing some potential first time buyers from even attempting to get on the ladder.
‘These latest figures show, there are opportunities for those who do want to but their first home. The key is to provide more information, more education, and more help for non home owners in order for them to make the most of those opportunities,’ he added.