The Halifax first time buyer review has revealed that the number of first time buyers has fallen to the lowest level since records began in 1974, despite house prices falling to their most affordable since 2003.
According to the Halifax, in 2011, there were 187,000 people in the UK who bought a home for the first time. This number was 7% less than 2010 and nearly 54% lower than the recent peak of 402,800 in 2006.
The Halifax indicated that this was the lowest level that they had recorded since they began monitoring the levels in 1974.
Homes are considered to be affordable when they are priced at four times the average earnings for the area they are found in. At the peak of the property market in 2007, ‘affordable’ houses were to be found in just 5% of local authority districts around the UK. The number of districts with affordable housing has now risen to 44%, the highest level since 2003.
The report also indicated that there was a divide between the north and south of England when it cam to housing affordability. 95% of housing that was considered affordable was found in the Midlands and the North of England.
Seven of the top ten districts with affordable homes were found in Scotland. London had no housing that fell into the affordable bracket, and Peterborough was found to be the most affordable local authority district in Southern England.
A spokesperson from the Halifax suggested that while housing is becoming more affordable for people trying to get onto the property ladder, borrowing conditions and the current economic situation is preventing many from entering the market.
The Halifax indicated that in 2011, people needed an average deposit of £27,032 to buy a property. The figure was lower than the £31,905 needed in 2010, but still much higher than it was in 2007. The current average deposit equates to around 20% of the property value, where four years ago, it was only 10%.
The Halifax suggested that the majority people who were able to join the market in 2011 had received support from parents, with 64% of first time buyers reporting that they had received help from their parents or relatives.
However, the Halifax suggested that the number of first time buyers may start to grow again next year. The signs that the average deposit needed for a home and the re-introduction of some 95% mortgages, combined with the higher proportion of affordable housing, may see more people buy houses for the first time.
The government are hoping that first time buyers will be able to benefit from their mortgage indemnity scheme and encourage more people to buy.
The the temporary increase in the stamp duty threshold for first time buyers from £125,000 to £250,000 is due to end in March 2012. This benefited nearly 40% of first time buyers in 2011, and some experts suggest that it could disrupt the market when it returns to £125,000.