Despite house prices in the UK being at their most affordable level for eight years, the number of first home buyers is at it’s lowest point since 1974, a Halifax study has revealed.
The average price paid by first home buyers in November 2011 was affordable for someone on the average wage but despite this fewer people are joining the market, the study said.
“Housing affordability for those looking to get onto the property ladder for the first time has improved significantly over recent years, largely as a consequence of the decline in house prices since 2007,” said Martin Ellis, housing economist at Halifax.
“Nevertheless, conditions for potential first-time buyers remain tough. Difficulties raising the necessary deposit and concerns over the economic climate are preventing many from entering the market.”
Recent increases of the deposit required to take a mortgage is one of the factors keeping first-timers out of the market. This year the average price of a deposit was £27,032, compared to £17, 482 in 2007. As a proportion of purchase price the average deposit has increased from 10% to 20% in the past four years.
The study also revealed a stark contrast in housing affordability in the North and South. 95% of the areas deemed as ‘affordable’ to first home buyers were in the north of UK and 70% were in Scotland. The most affordable area to buy a house is in South Aryshire with an average house price of just 2.5 times the average annual earnings. Peterborough in the East of England is the most affordable area in southern England.
Not surprisingly, London is the least affordable place for a first home buyer, with not one area of the capital being deemed ‘affordable’ by Halifax. The average price of a home in Brent in London is nine times the average annual salary.
Table 1: % of affordable areas for First Time Buyers by Region, 2007-2011
|
2007 |
2010 |
2011 |
||||
| Affordable | Unaffordable | Affordable | Unaffordable | Affordable | Unaffordable | |
|
% |
% |
% |
||||
| North East |
0% |
100% |
83% |
17% |
100% |
0% |
| Wales |
0% |
100% |
75% |
25% |
83% |
17% |
| Yorkshire and The Humber |
12% |
88% |
82% |
18% |
82% |
18% |
| North West |
4% |
96% |
85% |
15% |
81% |
19% |
| East Midlands |
11% |
89% |
84% |
16% |
79% |
21% |
| Scotland |
31% |
69% |
77% |
23% |
77% |
23% |
| West Midlands |
0% |
100% |
32% |
68% |
32% |
68% |
| South West |
0% |
100% |
8% |
92% |
8% |
92% |
| East of England |
0% |
100% |
10% |
90% |
7% |
93% |
| South East |
0% |
100% |
0% |
100% |
6% |
94% |
| London |
0% |
100% |
0% |
100% |
0% |
100% |
| United Kingdom |
5% |
95% |
42% |
58% |
44% |
56% |
