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28 Oct

First Time Buyer Tracker - October 2014

Posted 28/10/2014 by: Reeds Rains

First-time buyer sales climb 11% despite wider market slowdown

  • September sees 25,800 first-time buyer completions – up 11% compared to 23,200 a year ago
  • Average first-time buyer deposit falls 8% year-on-year to £26,134, despite purchase prices rising
  • Average first-time buyer deposit now represents 67.6% of annual first-time buyer income – down 12 percentage points year-on-year

The number of first-time buyer house completions in the UK increased year-on-year in September, defying trends of a slowdown in the market, according to the latest First Time Buyer Tracker from Reeds Rains.

There were 25,800 first-time buyer completions in September 2014, 11% more than 23,200 a year ago. New buyers are also paying more for their first home. The average first-time buyer purchase price rose 3% over the same period to £150,950, the fourth consecutive month in which average purchase prices have topped £150,000.

Despite purchase prices rising, the average first-time buyer deposit fell 8% year-on-year from £28,498 twelve months ago to £26,134 in September 2014 – as Help to Buy made higher LTV lending more accessible for borrowers.

At the same time, deposits fell even faster as a proportion of annual income. The average first-time buyer deposit represented 67.6% of annual income in September, 12 percentage points lower than in September 2013.

David Newnes, director of estate agent Reeds Rains, comments: “Help to Buy has helped keep the blood pumping in the first-time buyer market over the last year, allowing borrowers struggling to save for a deposit the financial life support they need to purchase property.

“At the same time, MMR regulations have performed a health check on their finances, ensuring they will be able to withstand a future base rate rise. Lenders have increased the range of higher LTV options available to borrowers, allowing the average first-time buyer deposit to fall even as purchase prices increase.

“But the sands are shifting in the first-time buyer market. Loan-to-income caps announced in June have added further restrictions for lenders to factor in, on top of the tranche of regulations implemented in April. The effect is that lending is tied to wages much more tightly than in the past. Borrowers increasingly have to prove their financial resilience to access the higher LTV deals available. There is more lending, but at the same time it is more responsible and sustainable.”

Read more about the First Time Buyer Tracker - October 2014 here