Massive rise in first-time buyer transactions
Published by Max Salsbury for 24dash.com in Housing and also in Finance
'North-South divide' over stamp duty payments
The number of first-time buyers rose by 45% year-on-year in July, representing the highest amount since November 2007.
There were 26,100 first-time buyer transactions in July, up 8,100 on July 2012's sales.
LSL Property Services, whose latest first-time buyer monitor revealed the figures, has attributed the dramatic rise to the sharp fall in mortgage rates.
The average mortgage rate fell from 4.92% in July 2012 to 3.99% this year.
However, LSL has warned that rapidly increasing house prices are threatening to price the next wave of first-time buyers out of the market. The average deposit is now equal to 83.1% of annual income, up 5.0% on July last year.
The average purchase price for a first-time buyer rose by 8% year-on-year in July, and is now £146,726. This was 0.3% higher compared than in June when the average purchase price was £146,250 and 6.0% higher than the average price so far this year, which was £138,353.
And the average LTV for a first-time buyer remained broadly flat – down 0.4% year-on-year to 79.5% in July, and down just 0.1% from June.
David Newnes, LSL director, said: “Mortgages are much more affordable for first-time buyers compared to last year, which has opened the door to thousands of would-be buyers who were shut out of the market. Economic confidence is returning, nudging many more buyers in the direction of property, and nudging lenders to offer more loans to buyers with smaller deposits. Rates have fallen sharply, and there are good deals to be had for savvy first-time buyers, which has made a mortgage much easier to come by. The uptick in confidence, beneficial to both parties, is contagious.
“But there is a down-side to the good news. There is simply not enough housing stock to match continued demand. If supply fails to keep pace with demand the housing market will become increasingly unsustainable. Prices will rise sharply, and future first-time buyers will be left in the lurch. There is a desperate need for further cheap property in order for the run of success to continue.”
READ NEXT »