First-time buyer levels at lowest since 1980

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by Kay Murchie

According to research by the Halifax, the number of first-time buyers is at the lowest level since 1980.

Approximately 300,000 first-time buyers entered the market during this year, 15,000 fewer than in 2006 according to the research.

The study highlights the affordability crisis as the majority of first-time buyers can no longer afford to buy a terraced house – usually the least expensive type of property and once thought of as typical first-time property.

The average terraced house was unaffordable to first-time buyers in 71% of towns across the UK, compared to just 11% in 2002. Consequently, first-time buyers are seeking parental help or looking to purchase a flat.

The research revealed that the least affordable town is Henley-on-Thames where the average property price is 13.1 times the gross earnings of an average first time mortgage applicant. Bootle in Merseyside was named the most affordable town for first-time buyers.

Martin Ellis of the Halifax said increasing property values have priced many potential first-time buyers out of the housing market. When they do enter the market, first-time buyers are now more likely to be in their thirties rather than their twenties and buy a flat rather than a terraced house.

Research from the Council of Mortgage Lenders (CML) has established that the days of first-time buyers being able to purchase a property on their own are gone, with the earnings of new borrowers well above the average wage. In October, the average earnings of individual or joint first-time buyers stood at £35,400, while the Office of National Statistics gives Britain’s average wage as £23,500.

Mr Ellis added that there is no fast solution to the problems first-time buyers face. A more subdued housing market over the next few years is a positive step for potential first-timers.

In addition, John Charcol the mortgage broker, said there will be a variety of factors that are likely to provide first-time buyers with a more favourable market next year. The mortgage broker has tipped lower interest rates, improved government shared equity schemes and other factors that will prove a turning point for first-time buyers in 2008.