Property & Mortgages

UK first-time buyer deposit rises

UK first-time buyer affordability stretched in 2019 as the average deposit increased by 7 per cent compared with the year earlier

Even as first-time buyers struggle to get onto the property ladder, affordability was pushed further in 2019 as the UK first-time buyer deposit increased by around £3,000 or 7 per cent, compared with the previous year, according to an analysis by Halifax.

While the average amount put down by the UK first-time buyer was £43,155 in 2018, it increased to £46,187 on an average in 2019, the analysis found.

The typical average first-time buyer deposit varies widely across the UK, with £109,885 for London, while a first-time buyer in the North East of England needs to put down £24,091 as deposit.

The average price paid by a first-time buyer in the UK was £231,455 during the previous year – up by £18,252 or 9 per from £213,203 in 2018.

The most affordable area for local first time buyers was Burnley in the North West of England, calculated by comparing average earnings with average house prices – with a ratio of 3.1.

Hackney in London was the least affordable, with an average house price-to-earnings ratio of 12.1.

The average price paid for a home by a first-time buyer in London has increased by £27,764 or 7% in the past year alone.

The price of an average first-time buyer property in the capital has more than doubled over the past decade, from £222,107 to £453,385.

Despite increasing costs, the overall number of first-time buyers has remained stable, up around 1% from 353,130 in 2018 to 356,767 in 2019, Halifax said.

This means that such buyers account for more than half (51%) of all house purchase loans.

The biggest percentage increase in the number of first-time buyers was seen in Northern Ireland, where first-time buyer numbers increased from 10,430 to 11,013 – up by 6 per cent year on year.

Managing director, Halifax, Russell Galley, said that whilst price growth in the overall housing market has been modest in recent years, the level of inflation facing first-time buyers is greater, which compounds the challenge in raising bigger deposits.

However, given their importance to the market as a whole, it’s reassuring that the overall number of new buyers getting on the ladder remains stable. This is in part explained by initiatives designed specifically to support this key group, including Help to Buy schemes and family support mortgages, and they also benefit from the continued period of record low interest rates.

He said that however, it’s clear that more needs to be done to address more fundamental long-term issues, not least the shortage of new, affordable homes being built.

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