Guardian.co.uk: First-time buyer numbers in London hit three-year high
Mon 26 Nov 2012
CML figures show 10,000 first-time buyers took out mortgages in the third-quarter of 2012, but the figure remains historically low. Ten thousand first-time buyers took out mortgages on properties in London from July to September, the highest number to buy a home in the capital during a single three-month period for almost three years.
The figures, published by the Council for Mortgage Lenders (CML), reflect a general increase in the number of first-time buyers across the UK, indicating that money provided by the government through its Funding for Lending scheme to encourage banks to lend to mortgage borrowers is beginning to filter through to the first-time buyer market.
But despite reaching a three-year high, the number of first-timers taking out a mortgage in London falls far short of the levels borrowed in 2006 and 2007 before the credit crisis and housing slump began.
The CML says that at 50%, the level of homeownership in London is the lowest in the UK, and, according to a recent report by the Homeowners Alliance. But because London is so big it has accounted for 28% of the value of all first-time buyer lending in the UK during the past 12 months.
Despite higher house prices and tough affordability criteria, London first-time buyers put down a higher percentage of their purchase price as a deposit: 25% compared to the average of 20% elsewhere in the UK.
The CML says this is partly because first-time buyers tend to be older in London, with an average age of 31 compared to 29 in the rest of the UK, and moreare helped financially by their parents. London first-time buyers also benefit from higher incomes, with anaverage household income of 50,00 compared to 34,000 in the UK overall.
But Peter Rollings of estate agent Marsh & Parsons said: "It's not plain sailing for first-time buyers in London. Higher house prices mean buyers must supply far larger deposits than elsewhere- a task made even tougher by lenders restricting new Londonbuyers to lower average loan-to-values (LTVs) than elsewhere, when the exact opposite is necessary to stimulate the lower end ofLondon's housing market.
"In the capital, the average buyer must now provide a deposit of over 60,000 - more than twice the UK average, without even factoring in the additional burden of stamp duty."
The number of Scottish first-time buyers also increased, up 6% to 5,100 in the third quarter of 2012 compared to the second, and up by 9% year-on-year. This represented the third successive quarter of growth, but it remains below the rate of growth shown in the rest of the UK at16%.
In Wales, 2,300 buyers secured their first home in the last quarter, up 10% on the previous three months but unchanged from the same period in 2011. On average, first-time buyers in Wales put down a smaller deposit than in the UK overall. The average deposit has remained unchanged for the nine months to the end of September at 15%.
Adam Davies of Cardiff-based mortgage specialist InTouch Financial Solutions said: "After years bumping along the runaway, the mortgage market is slowly and fitfully, taking off. There is plently of supply on tap with lenders finally ramping up the number of high-LTV products available.
"While lenders are offering many more higher-LTV loans, lending criteria are as tough as ever and many would-be buyers are continuing to sit on their hands for fear that the worst is not yet passed in the housing market. The mortgage market is airborne once again- but with such instability in thehousing market there could be more turbulence ahead."