A new report from Hometrack has revealed that first time buyers are currently the driving force for house sales. They were the largest group of purchasers in 2018 – making up 36% of all home sales, and it is expected that they will remain a major influence on the property market in 2019 too.

The Hometrack survey examined the key factors impacting first time buyers to discover that are most responsible for driving growth in regional markets where homes are affordable, bolstered by the availability of higher supported by the wider availability of higher Loan-to-Value (LTV) mortgages.

Interestingly, First time buyers appear to be eschewing their more traditional route of buying the cheapest or smallest homes on the market and are instead taking a long term approach. This has seen them grow in number 8 years in a row – up 85% since 2010 – to outpace all other buyer groups and become one of the principle movers in the housing market.

The government’s Help to Buy schemes have also supported the increase in First Time Buyers and Hometrack estimate that around 14% of all first time buyer purchases used Help to Buy in 2018.

First time buyers in London

First time buyer numbers have been increasing across all regions except for London, where they have fallen around 12% since 2014 – although this is a smaller decline than the 25% drop in overall sales across the London market. The report suggests these figures are also bolstered by Help to Buy which was estimated to account for around 13% of all first time buyer purchases in London during 2018.

Hometrack report that the household income required for a first time buyer to purchase a typical 2 or 3 bedroomed  home is around 10 to 15% lower than the average home; ranging from £35,000 per annum in the North to £75,000 in London.

Deposit levels have increased and on average cost about 23% of the purchase price nowadays, compared to 9% in the mid 1990’s. The average deposit for a first time buyer now ranges from £26,000 in the North to £140,000 in London.

Despite the growing constraints facing first time buyers who want to buy a home in southern England, they are still buying, using different ways to improve their chances, such as buying cheaper property to get on the property ladder or taking advantage of LTV mortgages –  greater than 90% – which are now more widely available than they once were.

London aside, a comparison of average purchase prices for first time buyers against prices across the property market in general reveals little evidence that they are buying cheaper homes as a response to affordability pressures. In fact, the gap between the average price paid by first time buyers and all buyers has been steadily reducing over the past twenty years. The report concludes that future first time buyer success will be very much dependent on the continued availability of affordable homes and any future changes to the various government Help to Buy schemes which have bolstered the chances of so many new investors, along with changes to stamp duty. Despite the volatility of the hosing market in some parts of the country, Hometrack expects first time buyers should remain the largest buyer group in 2019 with an estimated 36% of sales.

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