Zoopla Property : First-time buyer numbers slip

What's the latest?

First-time buyer numbers slipped in 2015 for the first time in four years.

An estimated 310,000 people bought their first home last year, down from 311,700 in 2014, according to mortgage lender Halifax.

But while there were marginally fewer buyers getting on to the property ladder, the number has grown by 60% since 2011.

Why is this happening?

The dip in first-time buyers is in line with overall house purchases, and is partly due to a lack of homes, Halifax suggested.

But the bigger picture is that first-time buyers have been boosted by improved mortgage affordability conditions since 2007.

People buying their first home accounted for 46% of all purchases with a mortgage in 2015, well up on the 36% seen at the start of the market downturn in 2007.

Despite rising house prices, record low mortgage rates meant first-time buyers spent only 32% of their disposable income on repayments between July and September last year, compared with a high of 50% in 2007.

At the same time, one in four people who bought their first home opted for a 35-year mortgage in 2015 - compared with just 16% in 2007 - in order to spread repayments over a longer period.

The Stamp Duty changes introduced in 2014 have also helped first-time buyers, with people getting on the property ladder in most regions now paying less of the tax and around a third not paying it at all.

Who does this affect?

The figures impact everyone on the property ladder, as first-time buyers represent an increasingly important part of the housing market.

Existing homeowners need first-time buyers to purchase properties at the bottom of the housing ladder to enable them to trade up.

Sounds interesting. What's the background?

'While affordability has improved since 2007, in many parts of the country the ratio of the average house price to earnings is still significantly above the long-term average of 4.'

Although low mortgage rates are currently helping buyers on to the property ladder, high house prices are likely to be a barrier to an increasing number of people.

The average price paid by first-time buyers jumped by 10% last year to £190,180, overtaking the previous peak of £174,994 in 2007.

And in London, first-time buyers typically forked out £367,990 for their first property, while those in the south east paid £242,111.

And when it comes to deposits, first-time buyers put down an average £32,927 last year - nearly double the £17,499 needed to buy a home in 2007.

In fact, the typical deposit paid by people in the south east soared by 24% in 2015 to stand at £44,024.

'Although the average price of the typical first-time buyer home has grown by 10% in the past year, the number of buyers taking that first step on to the housing ladder has been supported by favourable economic conditions; namely, record low mortgage rates, rising employment and real pay growth,' explained Craig McKinlay, mortgages director at Halifax.

'While affordability has improved since 2007, in many parts of the country the ratio of the average house price to earnings is still significantly above the long-term average of 4.0.

'This is a concern as it could prevent many potential buyers from entering the market.'

But there are still areas of the country that are affordable for first-time buyers.

Copeland in the north west and Inverclyde in Scotland lead the way with homes typically costing just 2.8 times average earnings, followed by Stirling in Scotland with a house price to earnings ratio of 3 and Blaenau Gwent in Wales at 3.1.

Top 3 takeaways

• The number of first-time buyers fell slightly in 2015 for the first time in four years.

• But there were almost 60% more first-time buyers last year than in 2011.

• The typical buyer paid £190,180 for their first home, overtaking the previous peak of £174,994 in 2007.

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