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More First-Time Buyers Getting on the Ladder

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First Time Buyers  National Housing Federation  Property Ladder 

More First-Time Buyers Getting on the Ladder

By - Wednesday 31 July 2013

The property ladder is seeing a rise in the number of first-time buyers, with the half-year Halifax First Time Buyer Review recording a 19 per cent increase year-on-year. Between January and June 2013, there were an estimated 120,000 new buyers, up from 101,000 in the first six months of 2012. This is the highest total recorded since 2007, when there were 181,500 first-time buyers.

First-time buyers also increased more than the total number of house purchases, meaning they now make up 44 per cent of the total market - up from 40 per cent in the first half of 2012. This is the highest proportion since 2000 and part of an upward trajectory that has seen first-time buyer numbers increase moderately year-on-year.

This is thanks in part to improved mortgage availability and affordability. In Q2 2013 the proportion of disposable earnings devoted to mortgage payments by first-time buyers stood at 27 per cent, compared to 50 per cent in Q3 2007. This figure is also below the long-term average of 36 per cent.

Craig McKinlay, mortgages director at Halifax, said: "The increased availability and reduced pricing of higher loan-to-value mortgages introduced over the past year or so have clearly contributed to the number of first time buyers rising to a six-year high. Government schemes, such as New Buy and Help to Buy, are also enabling more first-time buyers to enter the market."

However, while the recent figures are encouraging, the are still low by historical standards. Mr McKinlay explained conditions remain difficult, with many experiencing problems raising deposits. This is supported by recent research from the National Housing Federation showing that when noughties baby-boomers reach adulthood in 2020, they will be unlikely to be able to get their foot on the housing ladder. First-time buyer house prices will increase by 42 per cent between now and 2020, while rents will rise by 46 per cent. This will leave 3.7 million young people living with their parents.

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