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Tougher than ever for first-time buyers, despite stamp duty holiday

This effective deposit – far more than the theoretical minimum of 10% or 15% demanded by lenders – represents almost 1.8 times first-time buyers’ gross annual earnings, or the equivalent of 21 months’ salary before paying tax, national insurance or living expenses.

This is less than it was at the end of 2008, when it was over £70,000 or 2.4 times income.  But at a time of consolidation for the fragile housing market, it is becoming more, not less, difficult for first-time buyers.

The average first-time buyer home costs just over £155,200, which is £1,250 or 0.8% more than three months ago, in January.  This quarter of gradually rising prices contrasts with a long period of relative stability in first-time buyer property prices between spring and winter 2009

Nigel Lewis, property analyst at FindaProperty.com, comments: “There has been a gradual recovery in the housing market over recent months, but it’s worrying that home purchase is becoming more of a stretch for first-time buyers, as property prices rise and lenders become more restrictive with the loans they offer.  First-time buyers are the true lifeblood of the market, and they deserve more help to get on the ladder.

“There has been a significant increase in the number of properties coming onto the market, with stocks up 14% over the past quarter.  That means there’s an increasingly good choice of homes for sale, the Government has doubled the stamp duty threshold for first-time buyers, and consumer confidence is rising as summer approaches.  The building blocks are present for a sustained recovery, but we do need lenders to step up to the plate and free the purse strings for first-time buyers.  That will not only help the buyers themselves, but also the market overall and the wider economy.”

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