MortgagesNov 28 2014

First-time buyer completions stall in October

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The number of first-time buyer house completions stalled in October, as demand began to ebb away at the bottom of the market, according to estate agents Your Move and Reeds Rains.

There were 26,500 first-time buyer completions last month, 0.8 per cent more than a year ago, and 1.1 per cent fewer compared to the 26,800 in September.

First-time buyer transactions have now fallen back 12.3 per cent over the last three months, although the rate of slowdown is beginning to ease.

The 1.1 per cent slowdown between September and October compares to falls of 7.3 per cent between August and September and 4.3 per cent between July and August.

The average purchase price for a first-time buyer property rose 4.1 per cent year-on-year, reaching £152,684 in October.

Over the same period, the average first-time buyer deposit has fallen 6 per cent - boosted by a greater variety of options for higher loan-to-value borrowers – now sitting at £26,046, compared to £27,719 a year ago.

The size of an average first-time buyer mortgage climbed 6.5 per cent year-on-year in October to £126,638.

David Newnes, director of Your Move and Reeds Rains, explained that Help to Buy reinvigorated the bottom of the market by adding confidence.

“But other factors have pulled this back over the last few months: confusion over a base rate rise, global uncertainty, falling house prices and an inadequate supply of affordable homes have all contributed to a hesitation among first-timers about whether now is the right time for them to buy.

“Stalling first-time buyer completions is down to dipping demand, rather than mortgages becoming less accessible. Compared to a year ago, there are now more options for first-time buyers unable to save up large deposits to get on the ladder.”

He added: “Cheaper rates have also played a part, by allowing first-time buyers to lock into cheaper monthly repayments.”

peter.walker@ft.com