Jan 15 First Time Buyer Barometer

Under embargo until 00:01 Friday 30th January 2015
January 2015
Housing ties with healthcare as the biggest election
concern for tenants

For tenants, housing and healthcare will be the issues most likely to affect their vote in the 2015 General
Election

Seven in ten prospective buyers cited the inability to build a deposit as one of the biggest blocks to
homeownership

December sees 24,800 first-time buyer transactions, 8% lower than a year ago as demand slows
Monthly
Transactions
Average Purchase
Price
Average Deposit
Average Mortgage
December 2014
24,800
£155,413
£27,384
£128,029
November 2014
25,900
£150,388
£25,882
£124,506
1 month change
-4.2%
+3.3%
+5.8%
+2.8%
3 month change
-5.3%
+2.4%
+4.2%
+2.0%
1 year change
-7.8%
+3.0%
+1.6%
+3.3%
Housing and healthcare are the two biggest concerns for both tenants and first-time buyers in the run-up to the General
Election in May, according to the latest First Time Buyer Opinion Barometer from Your Move and Reeds Rains.
For tenants, housing is just as likely as healthcare to affect how they will choose to vote. One in six tenants (16%)
revealed that housing was the issue that would be most likely to affect their vote at the General Election, while a further
16% cited healthcare as their primary concern. The jobs market was the third most-quoted option, selected by 11% of
tenants, followed by education (6%) and infrastructure/transport (1%).
Housing also proved a primary concern for a large proportion of first-time buyers (17%), although it was not their biggest
concern – 23% of first-time buyers reported that healthcare was the issue that would be most likely to affect their vote.
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Despite this, the vast majority of prospective first-time buyers (78%) reported that the upcoming General Election has
had no influence on their decision to actually buy a home at this point.
Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “Of all the troubles facing tenants, the
struggle to get onto the housing ladder is their biggest concern – and it is most likely to affect how they may choose to
vote in May. We are in the grips of a housing crisis, with our population increasing at a faster rate than we are building
new homes. And while wages have experienced a marked uplift over the last few months, the affordable housing
conundrum is far from solved. Even economic heavyweight Mark Carney has complained that housebuilding is too low.
“In order to put a dent in this housing crisis we need to make some tangible changes in how we control construction. We
should ease planning regulations to get rid of the layers of bureaucracy slowing the process, and we need to make it
easier to regenerate brownfield sites. On top of that, we should support smaller construction firms hampered by the
credit crunch, and encourage skilled construction workers to stay in the field. This is about making it quicker and easier
to build, and making sure we have all the resources at the ready.”
FIRST-TIME BUYER DEMAND SLOWS
Slowing first-time buyer demand has pushed the number of first-time buyer completions down. There were 24,800 firsttime buyer completions in December 2014, 4.2% fewer than in November and 7.8% fewer than 26,900 a year ago.
However, 2014 as a whole still saw substantially more first-time buyer sales than 2013, with 311,300 first-time buyer
completions in 2014 – 15% more than 270,500 in 2013.
The average first-time buyer purchase price has risen 3.0% year-on-year, reaching £155,413 in December. First-time
buyer deposits have also risen – but at a much slower pace – as Help to Buy has allowed more higher LTV borrowers
access to finance. The latest Mortgage Monitor from e.surv showed that lending to higher LTV borrowers increased 5%
month-on-month in December.
The average first-time buyer deposit was £27,384 in December 2014, up from £26,961 in December 2013, with recent
stamp duty savings helping first-timers to put together larger deposits. First-time buyers paying the average purchase
price (£155,413) would have been liable for stamp duty fees of around £1,550 before the graduated system was
implemented, but this would now have been reduced to £600 – meaning savings averaging £950 which have boosted
their deposit capacity.
Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “On paper, now is a fantastic time to get
onto the housing ladder. Mortgage rates are at record lows, pushed downwards by falling inflation and rising certainty
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that an interest rate rise will be put off until the tail end of the year – if then. At the same time, wages are healthier, and
first-timers are seeing their finances recover from the plague of the recession. On top of this, the government has
extended an additional helping hand to first-timers with the revision of stamp duty, which will particularly benefit those
buying in the capital. And the Help to Buy scheme remains in place, providing a shortcut to saving for a large deposit,
meaning first-timers can lock into the property market before prices climb further.
“But despite this combination of favourable conditions, the number of first-time buyers has fallen back. Mortgages are
more accessible than ever, but fewer buyers are taking advantage of the finance on offer. Misunderstanding over new
regulation, global economic uncertainty and a lack of cheap homes are stymieing the recovery in first-time buyer
numbers, causing a temporary dip in December.”
BLOCKS TO HOMEOWNERSHIP
Your Move and Reeds Rains asked tenants what was preventing them from getting on the housing ladder, and
discovered that the challenge of putting together a deposit was the biggest block to homeownership.
Seven in ten (68%) prospective buyers cited the inability to put together a cash deposit as one of the reasons preventing
them from getting onto the housing ladder in December, while the second most popular reason was having insufficient
income to support mortgage repayments (25%).
One in five (18%) prospective buyers named concerns over expensive transaction costs, including stamp duty and legal
fees as one of the barriers to buying, and 11% worried that interest rate rises may push up their mortgage repayments.
Worries about decreasing income (7%), unemployment (6%) and falling house prices (6%) also concerned a significant
portion of prospective buyers. Finally, 6% of prospective buyers said they were waiting to see what would happen at the
General Election in May.
FINANCIAL HELP FOR FIRST-TIME BUYERS
Under half (43%) of first-time buyers said they were able to self-finance their purchase in December. A third (34%)
reported that relatives helped them to put together a deposit, compared to 37% in December 2013. Use of the Help to
Buy Scheme helped fill this gap - in total, 9% had made use of Help to Buy in December 2014, with 4% taking
advantage of the equity loan scheme and 5% using the mortgage guarantee scheme. This compares to just 3%
reporting they had used either aspect of Help to Buy twelve months before.
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A further 9% of first-timers revealed they had benefited from an inheritance. And 4% reported that relatives were going
to help them with mortgage repayments.
Adrian Gill, director of estate agents Your Move and Reeds Rains, explains: “Help to Buy is filling a vital gap – helping
those who can’t afford to put together a large deposit to get onto the housing ladder regardless. This is all the more
important as the Bank of Mum and Dad is starting to dry up – the proportion of first-time buyers receiving help from their
parents has fallen compared to last year. And, crucially, Help to Buy is allowing those in areas of the country still waking
up from the coma of the crisis to get onto the housing ladder – areas which are now only just beginning to feel the
energy emanating from the economic recovery.”
STAMP DUTY
A third of prospective first-time buyers said that the recent changes to stamp duty would make them more likely to buy,
with 15% reporting that they are ‘much more likely to buy’ as a result of the changes and 17% saying they are ‘slightly
more likely to buy’. However, the changes have had no effect on the majority of buyers, with 59% revealing the overhaul
would have no impact on their decision.
Adrian Gill, director of estate agents Your Move and Reeds Rains, continues: “The stamp duty shake-up means that
buyers looking to purchase property sitting just above one of the old thresholds stand to save a bundle on upfront costs.
But for first-time buyers, the reforms will only touch certain regions of the country. In some areas, the typical first-time
buyer property is priced far below the lower stamp duty threshold, and so the changes will have no direct impact on
many local first-timers. However, the overhaul will still invigorate these areas, adding an extra incentive for homemovers further up the chain to trade-up, encouraging more activity in the market.”
REGIONAL DIFFERENCES
The average first-time buyer in London and the South East was 33 years old and earning £47,300, but in the rest of the
UK, the average first-time buyer was 31 years old and earning £32,100.
The average purchase price for first-time buyers in the capital climbed above £300,000 for the first-time on record in Q4
2014 – compared to an average of £151,692 across the UK. At the same time, the average deposit size for buyers in the
capital climbed to £74,133, also a new record.
Similarly, purchase prices in the South East crossed the £200,000 threshold in Q4, as the average purchase price rose
to £202,933. Despite these climbing prices, there were 16,800 first-time buyers in the South East over the quarter.
SEE FULL REGIONAL MAP OVERLEAF
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Region
Average Purchase
Price
Average deposit
Average mortgage
Number of FTBs*
London
£300,115
£74,133
£225,982
12,600
South East
£202,933
£32,284
£170,649
16,800
East of England
£160,458
£22,739
£137,719
2,900
South West
£155,935
£24,455
£131,481
6,500
Grand Total (UK)
£151,692
£24,424
£127,268
79,900
West Midlands
£130,864
£21,634
£109,229
6,400
East Midlands
£129,010
£20,737
£108,273
5,600
North West
£120,791
£17,844
£102,948
7,600
Yorkshire & Humber
£118,799
£17,221
£101,577
6,300
North East
£114,838
£19,750
£95,088
3,100
Wales
£109,541
£7,885
£101,657
3,000
Scotland
£106,065
£14,004
£92,061
7,100
Northern Ireland
£90,254
£12,489
£77,765
1,900
Heat map of first-time buyer purchase prices
(Q4 2014)*
£220,000 +
£190,000 - £220,000
£160,000 - £190,000
£130,000 - £160,000
£100,000 - £130,000
Less than £100,000
* This is the total number of FTBs in Q4 2014. Based on CML regional data (released 26th November 2014) on the number of FTBs
in Q3 2014 – grossed up to reflect growth in FTBs recorded by Your Move and Reeds Rains between Q3 2014 and Q4 2014.
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Examples of First-Time Buyer Properties**
North West
Scotland
North East
One bedroom house
One bedroom house
Two bedroom house
Hyde
Auchterarder
Ferryhill
£30,000
£69,995
£42,000
Yorkshire & Humber
Northern Ireland
Two bedroom apartment
Two bedroom house
Hull
Carrickfergus
£36,000
£22,500
East Midlands
West Midlands
One bedroom flat
One bedroom flat
Swadlincote
Bromsgrove
£62,500
£69,950
East Anglia
Wales
Two bedroom house
Two bedroom apartment
Great Yarmouth
Rhyl
£80,000
£65,000
South West
London
South East
One bedroom flat
Two bedroom flat
One bedroom apartment
Sidcup
Waterlooville
£169,995
Camborne
£89,950
£67,950
** Properties on the market with either Reeds Rains or Your Move estate agents at the time of going to press.
– ENDS –
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Press contacts
Tora Turton, The Wriglesworth Consultancy, [email protected], 020 7427 1445
Adam Kirby, The Wriglesworth Consultancy, [email protected], 020 7427 1440
Methodology
LSL uses the extensive monthly data from registered first-time buyers in its estate agency brands Your Move and Reeds
Rains to update the CML’s first-time buyer data before the CML’s RMS data is published. The term ‘first-time buyer’ is
here denoted by the purpose of a buyer’s registration, rather than their LTV. LSL LTV data has been applied to CML
price purchase data to calculate deposit and affordability information. Sentiment and salary data are derived from a
survey conducted by LSL. The figures are not mix or seasonally adjusted, and are subject to revision as more data
becomes available.
This First Time Buyer Opinion Barometer has been prepared by The Wriglesworth Consultancy for LSL Property
Services. It has been compiled using information extracted from LSL’s management information. The copyright and all
other intellectual property rights in the First Time Buyer Opinion Barometer belong to LSL. Reproduction in whole or
part is not permitted unless an acknowledgement to LSL as the source is included. No modification is permitted without
LSL’s prior written consent.
Whilst care is taken in the compilation of the First Time Buyer Opinion Barometer, no representation or assurances are
made as to its accuracy or completeness. LSL reserves the right to vary the methodology and to edit or discontinue the
First Time Buyer Opinion Barometer in whole or in part at any time.
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