Initiatives in the pipeline
Government incentives such as the Help to Buy scheme has seen more young people get on the property ladder and this is only likely to increase when the Help to Buy ISA comes into play, which will provide those saving for a mortgage with a cash bonus every month.
However, increased demand is only good if the supply of homes is at the same rate. According to recent figures, the output of new homes has increased over the last year, but there is still some way to go if the government is to meet its 2020 target of 275,000 homes per year.
Deposits on the rise
According to the latest index, the number of first time buyers purchasing homes has risen by 8.9% in the last year, taking it past the previous high set before the recession. During July, there were some 29,700 sales of homes to first time buyers, an increase on June of 4.9%.
However, the average price of the home was £161,985 with buyers having to find close to £28,000 as a deposit.
This increase has been calculated at 10% compared with the same month last year, which in cash terms is around £2,500. The current cost of the average deposit in relation to that of a first time buyer’s average income reached 71.6% in July, which is an increase of 3.1% from June and 5.4% from 12 months ago.
Adrian Gill, Director of Estate Agents Your Move and Reeds Rains, explained the increase.
“Incentives attractive to first time buyers such as the Help to Buy schemes are running along steadily, while further low cost housing development is being encouraged to entice more people onto the ladder.
“Some may have held back briefly when considering the rising deposit costs. But real wages have been growing too, and first time buyers are able to shoulder the short term burden of a slightly higher deposit to spare the risk of losing out on a good mortgage deal,” he added.
Unsurprisingly, London continues to demand the highest house prices, with the average price for a first time buyer being £274,868. Compare this to the North East and Northern Ireland which came out the cheapest at £109, 240 and £106,176 respectively.