Thinking of taking your first step on the property ladder? You are not alone with first-time buyer numbers last year reaching their highest level since 2007, says a major lender.
First-time buyer numbers hit a 12-year high in 2019, accounting for more than half of all homes bought with a mortgage.
An estimated 353,436 people purchased their first property during the year, the highest level since 2007, according to Yorkshire Building Society.
While the total was broadly unchanged from 2018’s figure of 353,130, it was nearly twice as high as the 191,040 people who bought a first home in 2008, and continued to edge closer to the pre-financial crisis level of 400,870 recorded in 2006.
At 51%, first-time buyers also accounted for more than half of all home purchases made with a mortgage for the fourth consecutive year, up from just 38% in 2008.
Nitesh Patel, strategic economist at Yorkshire Building Society, said: “Even though the number of first-time buyers has stayed pretty much the same as last year, it is still encouraging to see first-time buyers top 350,000 for the second year in a row.
“They also represent over half of all homes bought with a mortgage, meaning the first-time buyer mortgage market share is at its highest since 1995, when they bought 53% of all mortgage-financed homes.”
The figures support our own Zoopla data, which also show a resurgence in the numbers of people buying a home for the first time.
Why is this happening?
A combination of factors has helped to boost first-time buyer numbers in recent years.
On the one hand, this group has been helped by an increase in lenders offering mortgages of 95% of a property’s value, reducing the size of the deposit first-time buyers need.
There has also been an increase in the availability of mortgages with terms of up to 40 years, which increases the affordability of monthly repayments.
At the same time, first-time buyers have also benefitted from significant government support, such as the Help to Buy equity loan scheme and Help to Buy ISA, as well as stamp duty relief on the first £300,000 of a property’s price.
Who does it affect?
Although London and the South East being the most expensive regions for first-time buyers, with typical first homes costing £415,618 and £264,097 respectively, they are also the most popular places for people getting on to the property ladder.
One in five people who bought their first home in 2019 did so in the South East, while 12% bought one in London, significantly higher than in other regions of the country.
First-time buyers accounted for 60% of all house purchases with a mortgage in London, despite putting down an average deposit of £131,000.
What’s the background?
Yorkshire Building Society said the slow year-on-year growth in first-time buyer numbers suggested they may now be plateauing due to affordability constraints.
It pointed out that property prices have grown faster than salaries over the past 12 years, meaning larger deposits are required to get on to the housing ladder.
Patel said: “These figures show the market may now have reached its peak and buying your first home still remains tough for many.”
Top 3 takeaways
- First-time buyer numbers hit a 12-year high in 2019, with an estimated 353,436 people purchasing their first property during the year
- They accounted for 51% of all home purchases made with a mortgage during the year, compared with just 38% in 2008
- But first-time buyer numbers were broadly unchanged from 2018, suggesting affordability constraints may be a growing issue
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