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The number of first time buyers in the UK increased by more than a fifth in 2014, the third successive annual rise, new data shows. The 22% rise was similar to the 23% rise recorded in 2013, according to the annual Halifax First Time Buyer Review. There were an estimated 326,500 first time buyers in 2014, up from 268,500 in 2013, the highest annual total since 2007 and was 70% higher than in 2008. The data also shows that first time buyers increased their share of all house purchases made with a mortgage, accounting for 46%1 in 2014, up from 44% in 2013. Mortgage affordability has improved significantly in recent years. The proportion of disposable earnings devoted to mortgage payments by a first time buyer stood at 32% in the third quarter of 2014, a substantial improvement compared with the summer of 2007 when this figure reached a peak of 50%. Record low mortgage rates have been a major contributing behind this improvement, the Halifax says. There has been a fall in the size of the average deposit needed by first time buyers to £29,218, some 7% lower than in 2013 when it was £31,582. It says that this decline was primarily due to the greater availability of loans requiring a relatively small deposit during the past year. Nonetheless, the average deposit is still £11,718 or 67% higher than in 2007 when it was £17,499. ‘First time buyers are vital for a properly functioning housing market. Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time, contributing to the significant increase in the number of first time buyers in the past two years,’ said Craig McKinlay, mortgages director at the Halifax. ‘Record low mortgage rates and Government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property,’ he added. The research also shows that nearly six in 10 first time buyer purchases are now above the £125,000 Stamp Duty threshold. The proportion exempt from paying stamp duty fell to 41% in 2014 from 45% in 2013. Almost half, 47%, of properties bought by first time buyers were priced between £125,000 and £250,000. Nationally, only 13% of first time purchases were above £250,000 in 2014. There were, however, considerable regional differences with more than half of first time buyers in Greater London, 56%, paying more than £250,000. The recent changes to the stamp duty system have saved the average first time buyer £781, reducing the tax bill for the average priced property of £171,870 from £1,718 to £937. Larne in Northern Ireland is named as the most affordable local authority district in the UK with an average property price of £80,793, some 2.8 times local average gross annual earnings. East Ayrshire and Inverclyde are the next most affordable also 2.8 and seven of the 10 most affordable authorities for first time buyers… Continue reading →
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