Halifax Mortgage advise first-time buyers are at a record low

Halifax Mortgage advise that the number of first-time buyers has fallen to the lowest point since records began, despite house prices being comparatively low compared to earnings.

In its annual first-time buyer review, Halifax found that affordability is more favourable for first-time buyers than it has been since 2003. However while the affordability for first-time buyers has reached an eight year high, the actual number of new purchasers in the market has hit an all time low.

The research analysed Halifax Mortgage’s own housing statistics database as well as data from the Council of Mortgage Lenders, the Office for National Statistics and the Department for Communities and Local Government. The statistics showed that in 44 per cent of all local authority districts in the UK, the average price paid by first-time buyers in November 2011, was below the long-term house price to earnings ratio of 4:1.

Despite the overall improvement in affordability, a strong north-south divide was shown. Ninety five of all the UK districts in the north were ‘affordable’ for first-time buyers in 2011 according to Halifax Mortgage’s model, with only one in twenty in the south recording first-time buyer purchase prices below the 4:1 average over the year.

Martin Ellis, housing economist at Halifax Mortgage, 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. “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.”