First time buyers now have to save for five years to get enough money to join the property ladder, claims the Halifax.
Based on data from the Halifax’s statistics database, the Council of Mortgage Lenders (CML) and the Office of National Statistics (ONS), the First Time Buyer Annual Review 2006 tracks housing affordability also reveals the number of first time buyers (FTBs) is the lowest since 1980.
The research shows FTBs take five years to save a typical amount of £23,967, for a deposit, equivalent to about 15% of average yearly earnings, compared to ten years ago, when it took just two years to save an average deposit of £5,479.
Over the last year, the number of FTBs has fallen 10% since 2004 to just 320,000, and 40% lower than the 532,000 in 2002. But the Review, does claim that numbers started to pick up in the second-half of 2005, with FTBs accounting for 30% of all new mortgages last year.
In addition, the Halifax research revealed the least affordable areas in the UK for FTBs, with nine out of the top ten situated around London and the South-East, led by Gerrards Cross in Buckinghamshire.
Meanwhile the most affordable areas were unsurprisingly outside of the south of England, apart from Gosport in Hampshire, with Nelson in Lancashire topping the list, with an average property price 3.3 times higher than a FTB’s average income.
The cost of the average property also increased by 5% in 2005 to £137,122 compared to £131,024 in 2004. The biggest price rises were in Northern Ireland which rose 16%, and the North West which gained 12%.
And in the UK there were only two regions where FTBs spent less than £100,000 on their home, they were Scotland at £92,880 and the North at £97,932, compared to five years ago, when first time homes, for less than a £100,000, could be found in all regions of the UK except London.
Tim Crawford, group economist at Halifax, says: “First time buyers need to save harder and for longer than ever before so as to put down a decent deposit on a house. This explains why the number of first time buyers entering the market was close to record lows in 2005.”
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