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Improvements in affordability has prompted record number of first-time buyers into the housing market, Halifax study finds. Photograph Graham Turner for the Guardian
Improvements in affordability has prompted record number of first-time buyers into the housing market, Halifax study finds. Photograph Graham Turner for the Guardian

First-time house buyers at five-year high in 2012

This article is more than 11 years old
Nearly 216,000 people bought their first house this year, the highest since 2007 but half the 402,800 in 2006

The number of first-time house buyers reached a five-year peak in 2012, according to a housing market survey.

Around 216,000 people bought their first homes in 2012, a 12% increase on 2011. While this is the highest number since 2007, it is still almost half the 402,800 people who bought their first home in 2006.

The age of first-time buyers has increased, rising from 29 to 30 while the typical deposit required is 20%, compared with the deposit of around 10% put down in 2007.

Halifax, which produced the survey, said mortgages were cheaper in 2012, which had increased the number of first-time buyers. Such buyers spend around 27% of their disposable income on mortgage payments, compared with the average 34% spent by existing mortgage holders.

Martin Ellis, a housing economist at Halifax, said: "The number of first-time buyers has risen to a five-year high, boosted by the improvement in affordability resulting from the reductions in both house prices and mortgage rates in recent years.

"Conditions for potential first-time buyers, however, remain very difficult, with problems raising the necessary deposit and concerns over the economic climate continuing to prevent many from entering the market."

The survey found the average house price paid by a first-time buyer increased slightly to £139,921 in 2012, a 3% rise from 2011. It found that the average price paid by a first-time buyer in November was affordable for someone on average earnings in 39% of local authority districts in the UK, compared with just 5% in 2007. Homes were classed as affordable if they cost less than four times the typical local earnings.

Stirling in Scotland was the most affordable district, with house prices at around two and-a-half times people's earnings. At the other end of the scale, first-time buyers in Camden, London, face buying a home which costs nine times the average wage.

The vast majority of local authority districts which were deemed affordable in the UK were outside the south of England. Just 5% of the affordable districts were located in the south, where house prices tend to have held up to a greater extent, and 95% were spread elsewhere in England or in Scotland, Wales or Northern Ireland.

The north-west was found to be the most affordable region in Britain, with 88% of local authority districts being affordable. London was the area most out of buyers' reach, with 100% of districts deemed unaffordable.

A typical first-time buyer in London is 32, two years older than the national average. First-time buyers in London put down the largest average deposit, at £62,356, while those in the north put down the smallest, at £14,936. The average deposit needed across the UK is £27,984.

The Council of Mortgage Lenders recently estimated that 65% of first-time buyers had financial assistance in mid-2012, compared with 31% seven years earlier.

The most affordable local authority districts for first-time buyers

1. Stirling, Scotland, 2.57 (house price to earnings ratio)

2. Renfrewshire, Scotland, 2.75

3. South Ayrshire, Scotland, 2.75

4. East Ayrshire, Scotland, 2.78

5. South Lanarkshire, Scotland, 2.83

6. Falkirk, Scotland, 2.86

7. West Lothian, Scotland, 2.86

8. North Ayrshire, Scotland, 2.89

9. Hartlepool, north-east, 2.91

10. Rossendale, north-west, 2.92

The least affordable districts for first-time buyers

1. Camden, London, 9.02 (house price to earnings ratio)

2. Oxford, south-east, 7.93

3. Brent, London, 7.90

4. Harrow, London, 7.89

5. Hackney, London, 7.72

6. Lambeth, London, 7.18

7. Ealing, London, 7.04

8. Haringey, London, 6.90

9. Wandsworth, London, 6.87

10. Newham, London, 6.86

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