First-time buyers in parts of south-east England are having to wait seven years longer to get on to the housing ladder than those in some other areas of the UK, according to figures from the UK’s largest mortgage lender.
Across the UK, the average age of a first-time buyer is now 30, but Halifax said this masked a big gap between the ages at which people were able to buy in different parts of the country. In Carlisle and Torfaen in south Wales, the average first-time buyer age is 27, but this rises to 34 in several boroughs in and around London.
The figures, based on mortgages approved by Halifax together with official data on earnings, show that the 10 areas with the youngest first-time buyers all have property prices below the national average of £200,754. In Carlisle, the typical first-time buyer property costs £122,826, or just under four-and-half times local earnings; in Torfaen, the average price is just over four times earnings, at £113,123.
In contrast, in Ealing, west London, where the average age of a first-time buyer is 34, homes cost more than 10-and-a-half times earnings, at an average of £410,763. The story is similar in many of the other areas where buyers are the same age.
Halifax’s figures show that the average age of first-time buyers has not increased as much as some might expect: in 1983, when its records began, the average age across the UK was 28 and this had risen to 29 by 2006. In London, the average has risen by three years over that period, from 29 to 32. In the south-east, it is four years higher than in 1983, at 32.
Lenders pulled out of offering 95% loan to value (LTV) mortgages following the financial crisis, making it hard for first-time buyers to enter the market. The government’s help-to-buy scheme helped to kickstart the market, boosting mortgage lending across the board. However, recent data has shown first-time buyers are now out in force – the latest data on gross mortgage lending showed it reached its highest August figure since 2007.
The mortgage guarantee element of the help-to-buy scheme is due to finish at the end of the year. The Bank of England has told the government that the end of the guarantee will not have detrimental effects on the supply of home loans.
The Bank’s governor, Mark Carney, said use of the scheme had declined significantly and just 3% of mortgage lending was conducted through the scheme in the first quarter of the year. “Total lending at high LTV has has not declined,” Carney said. “Instead, more high LTV has taken place outside the scheme, as the availability of high LTV has recovered from its crisis lows.”
However, the Intermediary Mortgage Lenders Association (Imla), which represents lenders who offer home loans through brokers, said it had concerns about the provision of high LTV loans after the closure of help to buy.
Imla’s executive director, Peter Williams, said: “Higher LTV products are vital in helping some first-time buyers on to the housing ladder, especially at a time when house prices and earnings are increasingly out of sync and deposits are hard to raise. By ending the scheme and not lining up an alternative, policymakers are closing off a not unimportant avenue to prospective first-time buyers.”
Figures from property firm Hometrack are likely to offer little comfort to prospective first-time buyers hoping to buy homes in any of the UK’s major cities. Although the pace of growth has slowed, prices across the 20 cities it tracks were up by 8.4% year-on-year in August.
Bristol continues to register the fastest rate of annual growth, at 13.1%, followed by London where prices rose by 10.4%. In Cambridge, the annual rate of growth fell from 16% in March to 6% in August. Hometrack said it expected London’s market to follow a similar path.
Richard Donnell, insight director at Hometrack said: “Record unaffordability, tax changes impacting investor demand and high stamp duty costs are all combining to reduce market activity in the face of rising supply.”
- This story was amended on 23 September to clarify that the mortgage guarantee element of the help-buy-scheme is due to finish at the end of the year, and not the scheme itself.
