Scottish first-time buyers are returning to the market, according to property firm DJ Alexander.
In the first quarter of 2024 new mortgage lending to first-time buyers increased by 9.6%, compared to 2.2% for existing homeowners.
David Alexander, the chief executive officer of DJ Alexander Scotland, said: “There has been real concern in recent years over affordability issues for first-time buyers (FTBs) in Scotland.
“The increasing house prices, coupled with higher interest rates has led to some questioning whether FTBs are as able to afford to buy a home now compared to recent times.
“Of course, there are enormous geographic variations in average house prices, so some places are substantially more affordable than others.”
The average first-time buyer house price in Edinburgh only rose by 4.5%, but still stood at £266,481 – over £100,000 higher than the Scottish average.
In Dundee first-time buyer prices only rose by 0.9%, while they fell by £137 in Aberdeen.
Glasgow’s average price for FTBs is almost exactly in line with the Scottish average, at £165,769.
The mean loan-to-value (LTV) ratio on mortgages advanced to first-time buyers increased to 80.9% at the start of this year.
Scotland had the third lowest level of deposit in the UK last year and, while average prices in Scotland for FTBs have increased by 4.7% over the year to July 2024 from £152,983 to £160,213. This was at a time when average income rose by 6.0%.
Alexander added: “So, for public sector workers and others with national pay deals the lesson is fairly obvious.
“First time buyers with these kinds of jobs getting a 6% average pay rise will find owning a home considerably easier in Dundee and Aberdeen than in Glasgow or Edinburgh.
“Therefore, far from being a bleak picture the first-time buyer seems to be returning to the home owning market with a vengeance. This is good news for everyone because the housing market requires the upward pressure of new buyers into the market to push all the other prices higher.”
“It is questionable, therefore, whether there needs to be any more financial support for first time buyers given how positively this group seem to be doing despite higher interest rates, continuing economic uncertainty, and with rising utility bills.
“Relative employment certainty, the continued strong desire to be homeowners, and pricing which remains affordable for a substantial number of first-time buyers is keeping the housing market going.”
