UK first-time buyer numbers up 22% in 2013, new research shows

January 13, 2014

The number of first-time buyers up in the UK increased by an estimated 22% in 2013, the largest annual increase in more than a decade, according to data published.

One reason may be that mortgage availability has increased in recent years and another that prices are more affordable, says the annual First Time Buyer Review report from the Halifax, one of the country’s major mortgage providers.

There were an estimated 265,000 first-time buyers in 2013, up from 218,000 in 2012.

However, the report points out that while this was the highest annual total since 2007; it was still nearly 30% lower than the annual average between 2003 and 2007 when it was 370,800. Overall first-time buyer numbers increased their share of all house purchases made with a mortgage, now accounting for 44%, up from 40% in 2012.

The data also shows that the proportion of disposable earning devoted to mortgage payments by a first-time buyer stood at 30% in the third quarter of 2013, a substantial improvement since the summer 2007 when this figure reached a peak of 50%. Record low mortgage rates have been a major contributing factor driving this improvement, the report says.

There has also been an increase in the proportion of areas that are affordable for first-time buyers since 2007. In 31% all of local authority districts in the UK the average house price paid by a first-time buyer in November 2013 were affordable for someone on average earnings based on the ratio of the average house price to earnings being below the long-term average of 4.0. This compares to the peak of the market in 2007 when just 5% of local authority districts were affordable.

The average price paid by first-time buyers in 2013 was 10% lower than it was in 2007 and 45% of all first-time buyer purchases in 2013 were below the £125,000 Stamp Duty threshold. A similar proportion, 46%, of properties bought by first-time buyers were price between £125,000 and £250,000. But the overwhelming majority, 98%, of first-time buyers in London bought homes above the £125,000 threshold, followed by the South East at 87% and the South West at 74%.

‘Low interest rates, improvements in consumer confidence and governments, such as Help to Buy, all appear to have contributed to the rise in the number of first-time buyers,’ said Martin Ellis, housing economist at the Halifax.

‘However, many potential first time buyers continued to find raising the necessary deposit a problem. The Help to buy mortgage guarantee scheme should enable more buyers to get on the property ladder with smaller deposits. Continuing pressure on household finances during the next 12 months will no doubt remain a constraint,’ he added.