First Time Buyers Your Time Is Now!
A study carried out by the Halifax has revealed that affordability of homes for first-time buyers is at its highest level for eight years.
The First-Time Buyer Review calculates affordability based on prices lower than people on average earnings in a given area can pay, taking as its base the historical average price-to-income ratio of four.
It was found that homes were affordable for someone on average earnings in 44 per cent of all local authority districts in Britain, the best result since 2003 and up from 42 per cent in 2010 and only five per cent in 2007.
The figures are also based on single incomes, so are conservative given that many people will be making purchases as a couple.
However, there was a strong north-south divide when the statistics were examined, with 95 per cent of affordable areas for first-time buyers in the north.
Despite the increase in affordability, Halifax discovered that there were only 187,000 people buying a home for the first time in 2011, the lowest since records began in 1974.
This could be because the average deposit required was £27,032 this year – 20 per cent of the purchase price – rather than the £17,482 necessary in 2007.
Halifax housing economist Martin Ellis said: “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.”
Earlier this month, Lloyds TSB found that affordability for people who have already bought their first home and intend to move up the property ladder at its lowest point for more than 25 years, reaching 5.2 times gross annual average earnings in October 2011.
