A report from Halifax has shown that the landscape for first-time buyers has changed dramatically since 2007. While data shows that the housing market has broadly recovered since the 2008 market crash, it also shows that first-time buyers are potentially being left behind.
So, what has changed since 2007?
1. Number of first-time buyers
In 2008, the number of new homeowners taking their first step onto the property ladder fell by 47%. Since then, the number of first-time buyers has gradually recovered.
Last year, the number of first-time buyers increased for the sixth consecutive year, with 359,000 people securing their grip on the property ladder. This signals a return to the pre-housing market crash of 2008. (Source: Halifax)
2. House prices
According to the UK House Price Index, a first-time buyer in 2007 could expect to pay an average of £189,193. In 2017, the average price of a first home had risen to £226,756, an increase of 19%.
Of course, the rate at which the average house price has changed varies greatly between regions. The difference between 2007 and 2017 first-time buyer prices across the UK is:
- South East 39% increase
- London 46% increase
- The North 8.1% increase
- Northern Ireland 33% decrease
- Wales 4.8% increase
- Scotland 4.5% increase
Meanwhile, deposits have almost doubled over the past decade. In 2007, the average deposit needed to secure a mortgage was £17,740. In 2017, this had increased by 91%, to £33,339.
3. Affordability
Some areas of the UK are more expensive to live in than others. So, it is hardly surprising that the areas with the highest house price to average earnings ratio for first-time buyers in the UK are all in the London area:
- Brent (12.9)
- Newham (12.0)
- Haringey (11.5)
- Hackney (11.3)
- Harrow (11.2)
- Hillingdon (10.9)
- Waltham Forest (10.8)
- Lambeth (10.7)
- Southwark (10.7)
- Ealing (10.5)
Meanwhile, the most affordable areas, with the lowest ratios can be found in the North West of England and Scotland:
- Copeland, North West (2.9)
- Stirling, Scotland (3.0)
- North Ayrshire, Scotland (3.1)
- Pendle, North West (3.1)
- Inverclyde, Scotland (3.2)
- West Dunbartonshire, Scotland (3.2)
- Renfrewshire, Scotland (3.2)
- East Ayrshire, Scotland (3.4)
- South Ayrshire, Scotland (3.4)
- North Lanarkshire, Scotland (3.4)
4. First-time buyer age
As house prices and the amount needed for a deposit have increased, the average age at which people can afford to buy their first home has crept higher. Across the UK, the average age of first-time buyers has risen from 29 to 31 since 2007.
Those two years might not seem like much, but with the average rent for the UK (excluding Greater London) reaching £758 per month in December 2017 (Source: ). That’s £9,096 each year which cannot be put toward a mortgage or deposit.
Getting onto the property ladder
Getting ready to buy your first home can take some time, but there are various schemes in place to help you get there sooner. These include:
Lifetime ISA: Save up to £4,000 tax-free and receive a 25% bonus from the government on every deposit you make. Lifetime ISAs are available to open between the ages of 18 and 39 and you will receive a 25% top-up on your deposits until your 50th birthday.
Help to Buy: Loans which help you to afford a deposit and secure your mortgage. These usually offer 20% of the house price and require that you contribute a 5% deposit to secure a 75% mortgage.
Bank of mum and dad: Asking your parents (or grandparents) if they can help you out.
Shared Ownership: Buying 25% to 75% of a property and paying rent on the rest until you can afford to buy it in full. This is usually available through housing associations and lets you buy your home gradually whilst living in it.
Starter homes: A government scheme which should see newly built homes start to become available at a discounted rate for first-time buyers.
If you are ready to start talking about how you are going to get onto the property ladder, contact us on 0800 612 8099 or request a call back by clicking here.