The average first time buyer in the UK in April was 30 years old, and earning £33,268 per annum, 3% lower than the average of £34,405 in March, new research shows. The number of property purchases entirely self funded by first time buyers was 51% as almost half received help to buy from an outside source such as their family, or a government scheme, according to the latest First Time Buyer Monitor from LSL Property Services.
It also shows that 36% received direct financial help to buy from their family, some 8% were using funds from an inheritance while just 1% was aided by a government scheme. Over a third of all first time buyers, 37%, said they had only recently been in a financially sound enough position to buy, while 11% bought as they believe it is a good time to invest because they expect house prices to continue to rise.
The most popular properties for first timers were houses with three or more bedrooms, with 44% looking for at least three bedrooms. A third of first time buyers were looking for houses with two bedrooms, the second most desirable property type. Flats were far less desirable to first time buyers than houses, with only 21% of buyers looking to purchase a flat in April. ‘The average earnings of a first time buyer declined in April, and deposits are now forming a larger percentage of their income. Many are turning to family to help them build enough capital to form a deposit as a result,’ said David Newnes, director of LSL Property Services, owners of estate agents Your Move and Reeds Rains.
Quote from PropertyCommunity.com : “First time buyer numbers in the UK are at their highest since 2007 but they are still nearly 50% lower than in 2005 before the global economic downturn, new research shows.”
‘And, as purchasing property remains difficult for first time buyers, they are looking to buy as a longer term investment, and often with family in mind. Houses are far more attractive than flats to first time buyers, now with an average age of 30, as they provide the much needed room to allow a new family to grow,’ he added.
The research also shows that four in 10 first time buyers believe house prices will remain steady in the next year, while 46% think they will increase by up to 5%. Only 8% of first time buyers expect prices to fall in the next year. Many first time buyers are buying property as a fairly long term investment, with some 62% expecting to stay in their property for more than five years, while less than one in 50 are planning to move in the next two years.
People who rent still aspire to being a home owner with some 96% of registered tenants hoping to become a home owner in April, up from 89% in December, but only 10% , down from 13%, believed they would be able to buy in 2013. Some 42% believed they would make a purchase within five years, while 15% thought they would never be able to afford to buy.
Despite a rise in the average LTV in April, 45% of first time buyers named an inability to save for a deposit as the number one reason preventing them from purchasing property. The study found 15% were concerned over not having a big enough income to support mortgage payments, 14% were concerned about transaction costs being too high but just 5% were concerned about either falling house prices and the same number about unemployment.
‘While desire to become a homeowner is high and rising, the number of tenants who are expecting to buy by the end of the year has hit a low. It’s a case of an aspiration gap that is growing wider still as deposits become less affordable, and poor wage growth and high inflation loot the savings of those looking to buy,’ explained Newnes.
First time buyer numbers in the UK increased by 15% as mortgages rates remain low and there is a widening choice of deals on the market. There were 22,000 first time buyer transactions in April, almost 3,000 more than in March, when there were just 19,100 transactions. The average mortgage rate remained low, only rising slightly to 4.31% in April from a record low of 4.29% in March. Annually, the average mortgage rate was 0.35% lower than in April 2012, with falling headline rates helping to attract more first time buyers.