Number of first-time buyers jumps 22% in 2013

First-time buyers of homes grew for a second consecutive year in 2013 with the number of purchases by those entering the market for the first time increasing 22 per cent over the 12 months, data from Halifax’s annual first-time buyer review revealed.

The latest figure is the largest annual rise since 2001 and follows a 13 per cent rise in 2012. First-time buyer numbers increased their share of all house purchases made with a mortgage, now accounting for 44 per cent, up from 40 per cent in 2012.

This is largely due to government schemes including Help to Buy, but Halifax also said mortgage affordability has improved “significantly” in recent years.

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The proportion of disposable earnings devoted to mortgage payments by a first-time buyer stood at 30 per cent in Q4 2013. Halifax labelled this as a “substantial improvement” since summer 2007 when this figure reached a peak of 50 per cent. Record low mortgage rates have been a major contributing factor driving this improvement.

There has also been an increase in the proportion of areas that are affordable for first-time buyers since 2007.

According to the data a third of all local authority districts was affordable in November 2013 for someone on average earnings, compared to 5 per cent of LADs in the peak of the market in 2007. The average price paid by first time buyers in 2013 was 10 per cent lower than it was in 2007.

Furthermore, 45 per cent of all first-time buyer purchases in 2013 were below the £125,000 stamp duty threshold.

Martin Ellis, housing economist at Halifax, said: “The number of first-time buyers is estimated to have grown by a fifth in 2013, the largest annual increase in more than a decade. Low interest rates, improvements in consumer confidence and government schemes, such as Help to Buy, all appear to have contributed to the rise in the number of first time buyers.

“However, many potential first-time buyers continue to find raising the necessary deposit a problem. The Help to Buy mortgage guarantee scheme should enable more buyers to get on to the property ladder with smaller deposits.

“Continuing pressure on household finances during the next 12 months will no doubt remain a constraint.”