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First time buyer numbers hit 9 year high

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Despite higher house prices, there were more first-time buyers in 2016 than at any time since the financial crisis.

What’s the latest?

First-time buyer numbers soared to a nine-year high in 2016, despite the typical price paid for a starter home breaking through the £200,000 barrier.

More people took their first step on to the property ladder last year than at any time since the global financial crisis first struck, according to Halifax.

The mortgage lender estimates there were 335,750 first-time buyers in 2016, the highest figure since 359,900 people bought their first property in 2007.

The typical deposit put down by first-time buyers had more than doubled since 2007 to stand at just over £32,000.

Why is this happening?

Record low mortgage rates have been a major factor helping people to get on to the property ladder.

Despite rising house prices, the typical first-time buyer spent an average of 32% of their take-home pay on mortgage payments in the third quarter of last year, in line with the long run average and well down on the peak of 50% reached in the summer of 2007.

Halifax also attributed some of the increase to government schemes such as Help to Buy, which have not only directly assisted people buying their own home, but have also helped reinvigorate the mortgage market for buyers with only small deposits.

Who does it affect?

The jump in first-time buyers is not only cheering news for those trying to get on to the property ladder, but is also good for the wider housing market.

First-time buyers are often described as the life-blood of the property market, as without them other homeowners struggle to sell their properties to trade up the ladder.

Halifax said new buyers played an increasingly important role in the market in 2016, accounting for 49% of all purchases made with a mortgage, the highest level since 1996 and up from just 36% in 2006.

Sounds interesting. What’s the background?

Last year was the third consecutive year in which first-time buyer numbers have totalled more than 300,000.

They have been steadily increasing after hitting a record low of 192,300 in 2008, although they are still some way off their pre-crisis peak of 402,800.

The average property price paid by a first-time buyer broke through the £200,000 barrier for the first time in 2016 to stand at a record £205,170, significantly higher than the £135,254 paid in 2009.

Unsurprisingly, people in London faced the highest prices at £402,692 for their first home, three-and-a-half times more than the £115,269 paid by those in Northern Ireland.

Those in the capital also put down the highest deposits at £100,445, followed by buyers in the south east at £47,472.

In order to afford the higher house prices they now face, growing numbers of first-time buyers have been opting for longer mortgage terms.

In 2006, only a third of first-time buyers had a mortgage term of more than 25 years, but last year that figure had ballooned to 60%, including 28% of people who had a term of between 30 and 35 years.

Top 3 takeaways

  • First-time buyer numbers soared to a nine-year high in 2016, despite the typical price paid for a starter home breaking through the £200,000 barrier.
  • An estimated 335,750 people bought their first home in 2016, the highest figure since 2007.
  • The typical deposit put down by first-time buyers has more than doubled since 2007 to stand at £32,000.

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First time buyer numbers hit 9 year high
Last Updated: 2017-01-19T14:57:45+00:00
By David Price
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