Monthly first-time buyer sales have hit a post-recession record, according to the latest figures from Your Move and Reeds Rains.
July saw 29,700 first-time buyers complete property transactions, the highest since August 2007, when it stood at 35,300.
The figure also represents a 28 per cent increase on April’s 23,200 – amounting to a 6,500 increase over the last three months – as well as a 4.9 per cent month-on-month increase on June’s figure of 28,300.
It comes despite the rising immediate costs of buying a home, with the estate agent’s statistics showing that the average first-time buyer deposit in July totalled £27,975 – 10 per cent more than last July’s £25,429.
The cost of a deposit as a proportion of a first-time buyer’s average income reached 71.6 per cent last month, up 3.1 per cent in one month alone and 5.4 per cent points from 66.2 per cent a year ago.
Equally, the average first-time buyer loan-to-value ratio is steadily dropping, meaning first-time buyers are having to pay more up-front, in the form of larger deposits. July’s 82.7 per cent rate represents a 0.5 percentage point decrease on LTVs in June and a 0.2 point decrease year-on-year.
First-time buyers saw a 22 per cent month-on-month increase in activity in June, compared to May, but little change year-on-year, according to data from the Council of Mortgage Lenders, with 28,300 new loans issued to first-time buyers which totalled £4.2bn.
Adrian Gill, director at Your Move and Reeds Rains, explained that the post-general election bounce has given way to a more stable optimism, as first-time buyers realise that the property market – at least their end of it – is at no immediate risk of being “tampered with” by the government.
“This month’s particularly high transaction rate is also partially due to expectations that the Bank of England may announce a rate rise sooner rather than later. The thought of months of rock-bottom mortgage rates being brought to an end is encouraging many wavering first-time buyers to jump on the property ladder before repayment costs shoot up.
“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.”
peter.walker@ft.com
