First-time buyers pay record prices

1 July 2017

The average price first-time buyers are paying to get on to the property ladder has hit a record high of £207,693, according to the latest Halifax First Time Buyer Review.

The bank reports that the number of first-time buyers was around 162,704 in the first half of 2017, which is only 15% below the peak of the last boom in 2006.

However, the number increased by 3% year on year - or by 154,200 - compared to a 10% annual rise in 2016.

First-time buyers pay record prices

While 10 years ago, 36% of house purchases financed by a mortgage were made by first-time buyers, in 2017, this had risen to 47% – and it is up by 3% since the government’s Help to Buy scheme was launched in April 2013.

In the past year, the average value of a first-time buyer home has grown by 4% from £199,414 to £207,693. Over five years, the average price has gone up by 50% from £138,663 to £207,693, compared with 42% for the rest of the market.

On average, first-time buyers paid a deposit of £32,899 – or 16% of the purchase price – in the first six months of 2017.

London prices rocket

In the capital, average house prices for first-time buyers have gone up by a whopping 66% (or £163,664) since 2012 to a record high of £409,975. The average price in London is 48% higher than the the South East (£276,773), which is the second most expensive region.

In London, first-time buyers have seen deposit go up from £26,701 to £100,445 in a decade.

First-time buyers pay record prices

Longer mortgage terms more popular

To cope with rising house prices, first-time buyers are opting for longer mortgage terms than the traditional 25 years. While in 2007 48% of first-time buyers had a mortgage term of between 20 and 25 years and 38% had terms between 25 and 35 years, last year this had been reversed. Some 56% of first-time mortgages were for terms of 25 to 35 years or more, while just 26% had terms of 20- to 25-years.

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