The average first time buyer home was on the market at £160,174 in January. This has now fallen by almost £6000 to £154,205. This represents 4.8 times first-time buyer household income, down from 5.3 times.
Once they have secured their mortgage (based on average household incomes for the 25-34 age cohort, and CML average first time buyer income multiples), the typical first-time buyers now have to raise £55,700 from their own resources – a substantial affordability gap representing 1.74 times their gross pre-tax annual income. But this is still over £11,000 less than at the beginning of the year.
In today’s market, most first-time buyers turn to their families for help to bridge this affordability gap, according to new research conducted by FindaProperty.com. Some 37% were funded by the Bank of Mum & Dad, while 8% said they were bankrolled by another family member. In addition, 10% said they received an inheritance which helped towards the deposit.
The easing of first-time buyer house prices is largely attributable to the fact that first-time buyers have been hardest hit by the contracted employment market, reducing demand for entry level homes.
Michael O’Flynn, Director of FindaProperty.com, said: "Despite some efforts by lenders recently to launch new products aimed at first-time buyers, stricter lending criteria still means that the average new buyer still has to save 1.74 times their gross, pre-tax income for a deposit, which is no mean feat.
"However, their parents often recognise that the market is beginning to offer good value to first-time buyers and this may be the time to take the plunge. Returns on savings in the banks remain extremely poor, so property purchase by their offspring could be a wise financial move."
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