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First-time buyer sales highest since 2007

Oct 12, 2015
Monthly first-time buyer sales have hit a post-recession record, according to figures obtained by estate agents Your Move and Reeds Rains.

July saw 29,700 first-time buyers complete property transactions, the highest since August 2007, before the financial crisis struck, when it stood at 35,300. The July figure also represents a 28% rise on April 2015’s number (23,200) – amounting to a 6,500 increase over the last three months – as well as a 4.9% month-on-month uplift on June’s figure of 28,300.

The news comes despite the rising cost of buying a home. The average first-time buyer deposit in July totalled £27,975, marking a 10% increase on July 2014’s figure of £25,429. In cash terms, this equates to a rise of £2,546. The cost of a deposit as a proportion of a first-time buyer’s average income reached 71.6% in July, surging 3.1 percentage points in one month alone and rising 5.4 percentage points from 66.2% a year ago.

Equally, the average first-time buyer Loan to Value ratio (LTV), which represents the proportional size of an individual’s loan compared to the value of the property they are buying, is steadily dropping. This means first-time buyers are having to pay more up-front, in the form of larger deposits. July’s rate, 82.7%, represents a 0.5 percentage point decrease on LTVs in June and a 0.2 point decrease on a year ago, as the size of the average deposit rises.

A similar picture emerges in the latest Mortgage Monitor from e.surv. The data revealed a decline in the number of small-deposit loans given approval in July, dropping 5.9% compared to June and 7.1% compared to July 2014.

Adrian Gill, Director of Your Move and Reeds Rains said, “First-time buyers are experiencing a summer of white-hot activity, unimpeded by rising deposit costs. The post-General Election bounce has given way to a more stable optimism, as first-time buyers realise that the property market – at least their end of it – is at no immediate risk of being tampered with by the government. Rather, incentives attractive to first-time buyers – such as the Help to Buy scheme – are running along steadily, while further low-cost housing development is being encouraged to entice more people onto the ladder.”

Photo:  More first-time buyers completed property transactions in July than since August 2007.

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