First time buyers continue to flood the property market

The country’s lack of housing supply is coming under increasing pressure as more first time buyers enter the market, writes property developer Richard Carr.

Growth

Richard Carr First Time Buyers Keys

Is there enough supply to cope with the demand?

Data from the Halifax shows that the number of first time buyers in the UK increased by an estimated 10% in the first six months of 2016 compared to the same period 12 months ago.

This year there was just under an extra 15,000 first time buyers entering the market, taking the overall figure to 154,200. That’s more than double the market low which was recorded during the first half of 2009.

Since the same period in 2012, the numbers entering the market has always exceeded 100,000, however the market is yet to better its peak of 2006 when over 190,000 first time buyers were stepping on the ladder.

Demand vs Supply

Although the fact that more first time buyers are entering the market is good for lending, it is having a serious affect upon the country’s country housing crisis and forcing house prices up.

This is highlighted by the amount of money first time buyers are having to put down as deposits. The average first time buyer deposit in May 2016 was £33,960, more than double that in 2007 when it was £16,400. The report points out that there has been a 14% rise in the deposit over the past year which largely reflects the increase in house prices.

“There was a further increase in the number of first time buyers in the first half of the year with the total exceeding 100,000 in the first six months of each year since 2012. This rise has been broadly in line with a general improvement in market activity and is likely to have been helped by government measures including the Help to Buy scheme,” said Chris Gowland, mortgages director at the Halifax.

“Although numbers remain below their previous peaks and many potential first time buyers are facing escalating house prices and deposit sizes, record low mortgage rates continue to make buying seem a more attractive option than renting.”

Prices

As a result of the housing crisis the average price paid by first time buyers increased by 12% over the past 12 months from £178,399 to £199,414. Unsurprisingly, the highest average price was found in Greater London at £384,617 which was nearly £130,000 higher than the next most expensive region, the South East at £257,481.

For those with tighter pockets, Northern Ireland is the least expensive region with an average price of £110,675, 29% less than the London average.