The Yorkshire Building Society has calculated that the number of people buying their first home has risen by more thank 136% over the past decade.
The number of first-time buyers reached 170,080 during the first half of 2019, an increase of 3% on the same period last year and the highest figure since the same six-month period in 2007, just before the start of the global financial crisis.
The Yorkshire has based its market analysis on UK Finance data, using the numbers of first-time buyers recorded to June 2019.
Since 2011, the number of buyers getting on the housing ladder has grown every year and, since 2016, has reached more than 150,000 for the first half of the year. The number of new buyers is now just 6% below the pre-crisis level.
First-time buyers are also now the most active group of home-buyers, representing 52% of all UK homes bought with a mortgage. This is the highest market share since 1995, when 53% of all mortgage-financed homes were bought by those purchasing their first home.
The average price of a typical first-time buyer home has grown from £167,091 in the first half of 2007 to £236,089 in the first half of this year, an increase of 41%, or £68,997 in cash terms. This is equivalent to price growth of £5,750 per month over the 12 years.
While London has seen the largest price increase of 55% (or £155,027 in cash terms), all regions have seen a rise in property prices. The most affordable region for those looking to get on to the property ladder is the North East, where the average first-time buyer price is currently £136,974, less than a third of the value in London.
First time buyers are now also taking longer mortgage terms. In 2007, 48% of first-time buyer mortgages were on a typical 25 year term. By 2019 this proportion had dropped to 22%. In contrast, longer term mortgages of between 25 and 35 years now account for 62% of mortgages, compared to 38% in 2007.
Nitesh Patel, the Yorkshire Building Society’s strategic economist, said: “Whilst the current economic and political landscape is less than certain, these figures show an increasing confidence to get on to the house ladder with first-time buyer numbers close to their pre-crash levels.
“This is partly to do with a strong jobs market, with record numbers in full-time employment and resurgence in real earnings growth. Another factor is a highly competitive mortgage market is helping to keep borrowing costs at very low levels. Schemes such as Help to Buy and Stamp Duty relief have provided support to this market and intergenerational financial assistance has also enabled more people to purchase their first home. The fact this demographic now makes up more than half the total mortgage market share, compared to 2007 when it was just over one in three (36%), is testament to the support that is now available.
First-time buyers are important for a number of reasons. Homeownership is a key milestone for many young people and brings with it a level of personal financial security. Without a steady stream of aspiring homeowners who are able to get on to the property ladder, those who already own their property could find it more difficult to sell when they want to move on. And with the shift towards first-time buyers buying their forever home, these purchasers are becoming increasingly important to the new-build sector and therefore the wider economy.”
