Hope for first-time buyers as average deposit fell 15% last year

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The average deposit needed to access housing fell by 15 per cent last year, according to one of the UK’s biggest mortgage lenders.

It means first-time buyers paid £9,057 less upfront for their home in 2023 than the year before, according to a Halifax study.

However, they still pay a typical amount of £53,414, around 19% of the average purchase price.

On the scale...for less: Typical house prices and deposits for first-time buyers fell last year, says Halifax

On the scale…for less: Typical house prices and deposits for first-time buyers fell last year, says Halifax

The new figures are based on Halifax’s own mortgages and those of sister banks Lloyds and Bank of Scotland.

The average cost of a home for a first-time buyer has fallen by 5%, from a peak of £302,008 in 2022 to £288,136.

This compares to the overall rise in UK house prices of 1.7 per cent, according to figures previously published by Halifax, or a fall of 1.8 per cent according to Nationwide.

The average cost of a home for a first-time buyer has fallen by 5%, from a peak of £302,008 in 2022 to £288,136.

This compares to the overall rise in UK house prices of 1.7 per cent, according to figures previously published by Halifax, or a fall of 1.8 per cent according to Nationwide.

Where is the cheapest place to buy?

The cost of property remains high, around 6.7 times the average UK salary of £43,257.

This average earnings figure is based on the Office for National Statistics’ annual survey of hours and earnings for the second quarter of 2023, taken up to October 2023, and refers to the average full-time employee average .

It is higher than the median gross annual salary for full-time employees during the period, which was £34,963.

The affordability of properties depends on where you look in the UK.

Average deposits from first-time buyers in the East Midlands saw the biggest fall in 2023 compared to 2022, down 16%.

London and the South East both saw a 15 per cent decline, although at £108,848 and £59,075 respectively, they remain among the largest deposits in terms of liquidity.

First-time buyers in Islington, north London, still face house prices 10.6 times the average local salary of £57,548, making it the most expensive area in the country.

Meanwhile, many of the most affordable places to buy a first home are in Scotland.

Inverclyde, in west central Scotland, is the most affordable, with starter homes costing just 2.6 times the local average salary of £41,598.

The total number of people entering the housing market also fell by a fifth last year.

This is the biggest drop since at least 2013, when Halifax began collecting data. Even in 2020, in the midst of a pandemic, the numbers only fell 13 percent.

The biggest falls were seen in East Anglia and the South East, where the number of first-time buyers fell by 24 per cent. Scotland was the most resilient country, although figures still fell by 10 per cent.

First-time buyers still accounted for 53 percent of home purchase mortgages, up one percentage point from 2022, reflecting the decline in property transactions across the market.

This was due to rising mortgage rates and inflation, which strained household budgets.

What do people pay?  This shows average house prices and deposits for first-time buyers over the years 2022 and 2024.

What do people pay? This shows average house prices and deposits for first-time buyers over the years 2022 and 2024.

Kim Kinnaird, director of Halifax Mortgages, said: “Unsurprisingly, given the wider economic environment, the number of first-time buyers joining the property market has fallen again in 2023 to around 293,000.

“Despite this decline, first-time buyers accounted for more than half of all home loans. However, to get a foot on the ladder, most people are now buying under common names for the first time.

“The overall decline in house prices we have seen in 2023 will go some way to helping people get on the ladder for the first time – but these buyers are still reliant on a steady supply of properties in their price range, while they face continued pressure to save for a deposit, when rent and cost of living are high.

What homes are first-time buyers buying?

Townhouses were the most popular property type among first-time buyers last year, according to Halifax, accounting for 30 per cent of all new mortgages issued to first-time buyers last year.

However, this figure represents a drop of 7 percentage points compared to ten years ago.

A common thought: terraced houses are the most popular property type with first-time buyers

A common thought: terraced houses are the most popular property type with first-time buyers

First-time buyers have been buying more and more apartments over the past decade, up six percentage points from 2013.

London has seen the biggest increase in first-time buyers choosing an apartment to settle down in, accounting for 72% of purchases in 2022, up from 59% in 2013.

According to the Halifax analysis, first-time buyers are now on average 32 years old and 30 or over in all regions of the UK.

Ribble Valley in the North West has the youngest average first-time buyer, aged 27. The oldest first-time buyers, with an average age of 37, are found in Slough, in the South East.

Halifax also noted that more buyers were shopping with another person or with more than one person.

Almost two-thirds of mortgages taken out (63 per cent) were in the name of two or more people, it says.

According to the latest data from the Office for National Statistics, which covers the year 2022, people living alone made up 13 percent of the population and 30 percent of total households.

Ten percent of households consisted of a single parent living with their children.

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