First-time buyers fall to one-year low

Permalink: First-time buyers fall to one-year low
by Kay Murchie

Figures published by the National Association of Estate Agents (NAEA) have revealed that the proportion of first-time buyers purchasing property in November fell to its lowest level for a year.

According to the NAEA, 19% were first-time buyers in November - down 3% on October and the smallest proportion since November last year.

However, in May, first-time buyers accounted for 45% of agreed sales.

First-time buyers have always been a crucial part of the housing market and during the decade-long property boom, this group of buyers were able to get mortgages of up to or near the full asking price of the property.

However, the credit crunch put an end to that and figures show that first-time buyers still require an average deposit of 25%. Therefore, many are finding it very difficult to get onto the property ladder unless they have a hefty deposit.

Furthermore, first-time buyer numbers are expected to dwindle even further since the temporary stamp duty holiday ends on 31 December 2009.

In September 2008, the Government opted to increase the stamp duty threshold from £125,000 to £175,000 in a bid to revive the housing market.

Consequently, properties under £175,000 have been exempt from the tax. NAEA’s president, Gary Smith, comments: “Any tax holidays result in a distortion in the market and in the case of stamp duty, needed to be carefully managed and phased out, rather than falling off a cliff.”

“Unfortunately, as first-time buyers often form the foundation of selling chains, there could be repercussion throughout the sector,” concluded Mr Smith.