Hard times for first-time home buyers
The number of first-time home buyers in the UK has fallen to the lowest level since 1980, with average homes now unaffordable in most towns, according to the Halifax, the UK’s largest mortgage lender.
Mortgage lender Halifax said around 300,000 new buyers entered the market in 2007, 15,000 less than the previous year.
It also found that the average house was now out of reach of a typical first-time buyer in 96% of UK towns.
The average income for a first-time buyer is £31,294, while the average house price for a first-time buyer increased by 15% during this year to £175,093 - 5.59 times the average salary. During the last five years the average price has also soared by 82% from just under £96,000.
Martin Ellis, the Halifax’s chief economist, said: “Rising property values have priced many potential first-time buyers out of the market. When they do enter the market, they are now more likely to be in their thirties rather than twenties and buy a flat rather than a terrace house.
“There is no quick fix to the problem. A more subdued housing market over the next few years is a positive step for potential new entrants.”
Henley-on-Thames was the UK’s least affordable town, with an average property price of £642,672 - more than 13 times the average income of first-time buyer households in the area.
Seven out of 10 of the least affordable towns are in the South East.
Bootle in Merseyside was the most affordable location with average price of £112,689 - just over three times the average household income for a local first-time buyer household.
The Royal Institution of Chartered Surveyors (RICS) said conditions for first-time buyers should begin to improve in the coming year.
“There is huge pent-up demand from first-time buyers, and should house prices drop in the early part of the year, many will be ready to pounce, especially if more repossessions filter through into the market,” said RICS chief economist, Simon Rubinsohn.