New research from the Halifax (www.hbosplc.com) estimates 300,000 first time buyers entered the market in 2007 44% less than five years ago (532,000).
First time buyers cannot afford to purchase a terraced property traditionally, the least expensive home – in 71% of towns across the UK (322 out of 454). In 2002, the typical first-timer could not afford to purchase a terrace in only 11% of UK towns UK (51).
For the first time, the proportion of first time purchasers buying a flat (37%) is the same as the percentage buying a terraced property. Flats have seen the biggest proportionate increase over the last five years, a 13% rise.
The least affordable UK town for first timers is Henley-on-Thames where the average price is 13.1 times the average income of a first time buyer household, according to the Halifax research, while the most affordable is Bootle in Merseyside (3.4 times).
Also, the average first time house price is above the £125,000 Stamp Duty threshold in eight of 12 regions. In London, the typical first time buyer paid 3% Stamp Duty last year. The average London first time buyer price of £288,615 generates a Stamp Duty bill of £8,658, compared to the UK average bill of £1,750.
The Halifax calculates the average house price paid by a first timer rose 15% to above £175,000 in 2007 (£175,093). Over the past five years, the average price paid by a first time buyer increased by 82% from £95,994 in 2002.
It is reckoned the average deposit required by a first timer is 20% more than average full-time earnings and more than half of all first time buyers purchased their property in a city, compared to 47% five years ago.
More than half (51%) of first timers purchased their first property in a city, contrasting with 47% five years ago.
Martin Ellis, chief economist at the Halifax, says: ‘Rising property values have priced many potential first time buyers out of the housing market. When they do enter the market, first time buyers are now more likely to be in their 30s rather than their 20s, and buy a flat rather than a terraced house. First time buyers also are buying proportionately more in cities than towns as they opt for convenience over size.’