Number of First Time Buyers hits highest level since financial crisis

First Time Buyers have been out in force in 2019, revelling in falling prices and growing wages.

First Time Buyers reached an estimated 353,436 in 2019 whilst marginally up from the 353,130 recorded last year it is still the highest level since 2007.

Despite a lack of distinct growth in the last 12 months, the overall trend is that figures are gradually approaching pre-financial crisis, with the number of people buying their first home with a mortgage exceeding 300,000 in five of the last six years.

Data from the Yorkshire Building Society shows that almost twice as many first-buyers secured a mortgage in 2019 as at the start of the financial crisis in 2008, with those entering the property market now accounting for more than half (51%) of all homes purchased (with a mortgage) this year. In 2008 this share was just 38%.

Yorkshire Building Society based its market analysis on market-wide first-time buyer data to October 2019, with November and December estimated by the Society.

With an average price of £415,618 London is the most expensive region for first-time buyer homes, followed by the South East (£264,097). That said, they are the most popular regions for first-time buyers accounting for 12% and 20% of sales respectively – significantly higher than other areas. More so, first-time buyers make up 60% of all house purchases (with a mortgage) in London even though the average deposit put down is £131,000.

Strategic Economist Nitesh Patel said: “Even though the number of first-buyers has stayed pretty much the same as last year, it is still encouraging to see first-time buyers top 350,000 for the second year in a row. They also represent over half of all homes bought with a mortgage, meaning the first-time buyer mortgage market share is at its highest since 1995, when they bought 53% of all mortgage-financed homes”

However, the happy marriage of stagnating property prices and rising wages could soon be over. The price of starter homes is rising three times faster than the wider market, as demand continues to surpass supply.

“First-time buyer numbers may now be plateauing as property prices have grown at a faster rate than salaries over the past 12 years,” said Patel. “This means larger deposits are needed to get on to the property ladder, leading to challenges and barriers to homeownership, which are most pronounced in London and the south-east.”

In recent years first-time buyers have been helped by strong competition driving mortgage rates down to near-record lows, making borrowing more accessible. More mortgage lenders offering 95% loan-to-value mortgages, which reduces the need for a higher deposit. Home loans with terms of up to 40 years are becoming increasingly popular as first-time buyers look to lower their monthly mortgage repayment.

The popularity of Help to Buy has also rocketed in recent months, as First Time Buyers rush to take advantage of the scheme before it closes forever in 2023.

“Government schemes such as Stamp Duty relief, Help to Buy equity loans and Help to Buy ISAs will have made an impact,” said Patel. “This combination of factors has made buying a home more accessible in recent years.

“This has seen the first-time buyer market bounce back from the financial crisis and perform better than other sectors, such as the home-moving and buy-to-let markets. However, as these figures show the market may have now reached its peak and buying your first home still remains tough for many.”