1st Time buyers fall 67% in a decade

In a written answer to a question from the Conservatives published yesterday the Communities and Local Government department confirmed that the number of first time buyers last year had fallen to an all time low.

Ian Austin quoted figures from the Council of Mortgage Lenders which show that in 1999 there were nearly 600,000 first time buyers. This fell to below 400,000 when prices peaked in 2007 and were down even further last year – to just 193,600.

“Whilst the cost of borrowing has fallen for many as a result of low base rates, many first time buyers are still finding it extremely difficult to get a mortgage at present. According to yesterday’s release from the CML lenders typically require a 25% deposit.” says housing expert Henry Pryor. “We may be glad to see the back of 100% mortgages but the impact on the market has yet to be fully felt” he fears. “The cost of an average house is still over £165,000 nationally (Halifax) and borrowers of all type are on average finding 32% or £53,000 deposit, up from 29% in September last year.

Over 132,000 buyers have benefited so far from the Stamp Duty holiday introduced last year when the Government raised the threshold temporarily from £125,000 to £175,000. This will end in the New Year putting added pressure on first time buyer finances in particular. Unless prices fall then Government can’t make borrowing any cheaper” says Pryor. “It would be unimaginable for lenders to raise their loan to value to help out and so it is unlikely that we will see the number of people being able to buy their first home rise much in 2010. This will leave the housing market without the crucial sector that traditionally underpins the whole market and with the Buy-to-let market still out of favour, there are reasons for genuine concern as we head into an election year. The next government may well inherit a housing market with shaky foundations and serious structural concerns.

1996 465,300
1997 501,500
1998 525,200
1999 592,400
2000 500,200
2001 568,200
2002 531,800
2003 369,600
2004 358,100
2005 372,200
2006 400,500
2007 357,100
2008 193,600

Useful links