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Number of first time buyers reaches six year high

Recent figures from the Halifax First Time Buyer Review suggest that the number of people looking to purchase a home for the first time has risen to its highest point in six years.

The introduction of the new government scheme Help to Buy, which is due to come into full force in 2014, has arguably led to an increase in new first time buyers, despite being criticised by a number of housing experts. There is widespread concern that new buyers will stretch their budgets too far and create a housing bubble. Business Secretary Vince Cable, who has recently confirmed plans to use state guarantees to underwrite £130bn of low deposit mortgage lending, has agreed that this could be the case if the scheme is not correctly designed.

Statistics from the Halifax survey showed that the estimated number of first time buyers rose from 101,000 in the first six months of 2012 to 120,000 for the same period this year. The most recent year to record a figure higher than this was 2007, with 181,500 first-time buyers recorded in the first six months of the year.

The report also claims the average age of a first time buyer has risen in the past two years, from 29 to 30.

Though an increased number of first time buyers is arguably a required boost for the housing market, mortgages director for the Halifax, Craig McKinlay, warns: “The significant increase in first time buyers is encouraging, although the number of those buying their first home still remains low by recent historical standards.

The difficulty in raising a sufficient deposit is still a significant concern amongst first-time buyers, combined with the high number of people purchasing a home over the stamp duty threshold of £125,000 now at 51 per cent. The average deposit ranges dramatically from £13,526 in the North of England to £60,747 in London.

Statistics from the Council of Mortgage Lenders also show an increased number of first time buyers using financial help to obtain a mortgage, with 64 per cent asking for help in 2012. This data coincides with a recent report from housing charity, Shelter, whose statistics showed an average first time buyer requires around £17,000 from their parents in order to afford a deposit.

However, according to statistics, the situation has eased for homebuyers once they are on the property ladder. In 2007, homeowners were required to use around 50 per cent of their disposable income to afford mortgage repayments. According to the Halifax, this figure has dropped dramatically, even faster than the long-term average of 36 per cent, as homeowners now only spend around 27 per cent of their disposable income on mortgage repayments.

Julie Palmer

About the author

Julie Palmer

Regional Managing Partner

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Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.

Julie is a member of the Insolvency Practitioners Association and the None Administrative Receivers Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.

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