Homes cost less but first-time buyers at a record low

Houses bought by first-time buyers in November were found to be priced at “affordable” levels in 44 per cent of local authority districts in the UK, the highest proportion for eight years, the First-Time Buyer Review found.

A home was deemed affordable when it cost less than four times average yearly earnings – and only five per cent of properties met this criteria at the peak of the housing market in 2007.

The average age of the first-time buyer has also dropped slightly, from 30 last year to 29 in 2011. The average age falls to 28 in the North, Yorkshire and the Humber and Wales, and rises to 32 in London.

Those potentially getting on the property ladder will also devote around a quarter of their disposable earnings to their mortgage payments, tumbling from half their income during the peak levels of 2007.

Despite the more positive affordability figures, Halifax estimated that there were only around 187,000 first-time buyers in 2011, the lowest annual total since records began in 1974.

This figure is less than half the recent peak of 402,800 first-time buyers seen in 2006 and can be partly explained by the need to put down a bigger deposit, Halifax said.

The study said that as a proportion of the purchase price, the typical deposit has soared from 10 per cent in 2007 to 20 per cent in 2011.

The average first-time buyer deposit in the first 11 months of 2011 was £27,032, up from £17,482 in 2007.

First-time buyers in Greater London typically put down the biggest deposits, averaging £60,192 and a quarter of the average property value.

Buyers in the North had the smallest deposits – averaging £14,882 and 15 per cent of the value of their home.

Lenders have gradually been bringing back deals requiring lower deposits, but there have been complaints that the terms of the mortgages are too restrictive.

The Government recently announced a package of measures aiming to inject life back into the market.