The latest First Time Buyer Tracker index from Your Move and Reeds Rains reveals that the number of first-time buyers reached their highest level in July since the recession, paying £161,985, on average, which is 8.9 per cent higher than in the corresponding month in 2014.
Overall, there were 29,700 sales of residential properties to first-time purchasers in July, up 4.9 per cent month-on-month. This is in spite of the fact that the average first-time buyer now requires a deposit of £27,975, which is up 10 per cent compared with July 2014’s figure of £25,429.
While rising deposit costs may have deterred some prospective purchasers in recent months, increasing real wages have enabled some first-time buyers “to shoulder the short term burden of a slightly higher deposit” to spare the risk of losing out on a good mortgage deal, according to Adrian Gill (left), Director of estate agents Your Move and Reeds Rains.
He added, “This month’s particularly high transaction rate is also partially due to expectations that the Bank of England may announce a rate rise sooner rather than later. The thought of months of rock-bottom mortgage rates being brought to an end is encouraging many wavering first-time buyers to jump on the property ladder before repayment costs shoot up.”
With demand from purchasers, including first-time buyers, on the rise, Gill believes that “property prices can only increase”, based on the assumption that the economy continues on its upward trajectory.
He continued, “While the higher deposit and mortgage costs this brings may be a bother for some, taking a longer view, it’s a sign of a vibrant and dynamic property market.
“What may be more concerning for first time buyers is that average mortgage rates may be on the verge of climbing back up. But first time buyers shouldn’t worry. When a rate rise does come it is likely to be slight and gradual so home ownership will by no means suddenly become a costly dream. Instead, it will remain an affordable reality for those first time buyers with the drive and determination to make it so.”
The findings from the First Time Buyer Tracker index from Your Move and Reeds Rains is supported by the latest mortgage lending data from the Council of Mortgage Lenders (CML) which also showed that first-time buyers have returned to the property market.
The CML said that in June it had seen a 24 per cent rise on the previous month in the value of mortgages taken out by first-time buyers, bringing to an end a weak run of figures during the first half of 2015.
“After a slower than expected start to the year, lending now appears to be picking up as we expected, and in line with our recently revised forecasts,” said Paul Smee (right), the Director General of the CML.