First time buyer numbers rise by almost a quarter in 2015 as costs fall

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1 Under embargo until: 00:01 Tuesday 5 th January 2015 November 2015 First time buyer numbers rise by almost a quarter in 2015 as costs fall November sees 31,300 first-time buyer completions up 23.7% annually and the most since August 2007 FTB purchase prices drop 4.7% since November 2014 the first annual fall since March 2013 Deposit costs fall 4.2% annually to 24,598, with the proportion of FTB income they consume also sinking However, as average first time buyer mortgage rates inch up, 2016 threatens a Bank of England rate rise Monthly Transactions Purchase Price LTV November , , % October , , % 1 month change 4.7% -3.0% +0.3 (from 83.1%) 3 month change 17.2% -3.3% +0.8 (from 82.6%) 1 year change 23.7% -4.7% +0.6 (from 82.8%) The number of completed first-time buyer transactions has climbed to 31,300 in November, according to the latest Firsttime Buyer Tracker from Your Move & Reeds Rains. The figure represents an annual increase of 23.7% or 6,000 additional transactions compared to November 2014, when the total number of first-time buyer sales stood at 25,300. November 2015 s monthly transactions figure is also the highest since August 2007 before the economic downturn began when the number of completed transactions for first-time buyers previously stood at 35,300. 1

2 November 2015 also saw first-time buyer transaction figures perform strongly on a three-month and monthly basis. Between August and November the number of people successfully taking their first step onto the property ladder grew by 17.2% or 4,600. Similarly, the number of completed transactions in November rose by 4.7% month-on-month, representing 1,400 more first-time buyers than the previous month. Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: First-time buyer numbers have enjoyed a strong twelve months. Despite a shaky start at the beginning of 2015 as sluggish real-terms pay rises and worries about the health of the economy held back some first-time buyers recovered their confidence in time for Christmas. They aren t yet surfing on the rising tide of the British property market, but they have learnt to swim to catch up. There are a number of factors behind these solid figures. The effect of Government stimulus packages, such as the Help to Buy scheme, is one factor, while the lure of lower interest, higher LTV lending is another. What is perhaps a more important factor however is that over 2015 first-time buyers have become increasingly cost-savvy and determined when it comes to finding their ideal home. The days are over when those who wanted to get a foot on the ladder would take a look in an estate agent s window, before giving up due to property price panic. Instead, first-time buyers are now doing their research weeding out the best value-for-money properties in their desired area and driving a hard bargain to get what they want. They deserve to end the year with the quiet confidence that their determination has paid off. First-Time Buyer Affordability deposit Deposit as proportion of income mortgage rate Mortgage repayment as proportion of income November , % 3.37% 18.6% October , % 3.34% 19.1% 1 month change -4.6% month change -7.7% year change -4.2% HOME OWNERSHIP COSTS FALL BUT RATE RISE ON THE HORIZON FOR 2016 The costs for buyers of owning their first home have lightened over the past twelve months. The average price at which buyers are purchasing their first home fell from 155,745 in November 2014 to 148,385 in November 2015, representing an annual price drop of 4.7% or 7,360. November 2015 also marked the first time that the average purchase price for a first-time buyer home has fallen, on an annual basis, since March This purchase price drop for first-time buyer homes stands in contrast to the annual trend for the overall property market. The latest LSL Acadata House Price Index reveals that, across England and Wales, the average value of all property rose by 6.0% or 16,446 and now stands at 290,640. Deposit costs have also fallen. In November 2015 the average deposit for someone looking to buy their first home stood at 24,598 a drop of 4.2%, or 1,097, from November 2014, when the figure stood at 25,665. Alongside this, the proportion of an average first-time buyer s income which is consumed by the deposit has dropped from 67.3% in November 2014 to 62.5% a year later. 2

3 First-time buyers are experiencing a largely brighter picture when it comes to mortgages. The average loan-to value rate on a first-time buyer mortgage has climbed between November 2014 and November 2015 from 82.8% to 83.4% meaning that first-time buyers need less up-front capital to make their dreams of homeownership a reality. Over the same period, the total number of high LTV loans has jumped by 43.7%, according to the latest Mortgage Monitor from e.surv. However, despite the average mortgage rate for first-time buyers falling between November 2014 and November 2015 from 3.92% to 3.37%, there have been more recent signs that mortgage rates for FTBs are beginning to tick up. November 2015 s average mortgage rate represents a 0.02% percentage point increase on August and a 0.03 percentage point increase on October, meaning that first-time buyers will be, on average, shelling out more albeit a small amount more to pay their monthly mortgage interest. Adrian Gill continues: A mixture of luck and pluck have seen costs fall across the board for first-time buyers this year. Rising real-terms wages as economic conditions improve have certainly been instrumental in helping those setting foot onto the property ladder devote less of their salary to mortgage payments and deposit costs. These were obstacles that were previously holding many back from taking the plunge and buying their first home. Equally, a more fluid mortgage market has given many first-time buyers the chance to own a home off the back of a mortgage that two or three years ago they could only dream of obtaining. But first-time buyers are not just passive recipients of success they have played their part in bringing their homeownership costs down. The sizeable fall in the average purchase price for a first-time buyer property is largely due to property hunters toughening up and driving hard bargains to get the home they want for the price they want. The question going into 2016 will be whether first-time buyers can continue playing hard ball with a smaller housing stock, as well as contend with less favourable mortgage deals as the Bank of England creeps ever closer to that long-awaited interest rate rise. REGIONAL DIFFERENCES London remains the priciest location for first-time buyers. The average value of a first-time buyer property in the capital climbed to 343,614 in the three months to November The South East is the second-most expensive, with average FTB house prices there hitting 214,359 over the same period. Purchase Number of Region deposit mortgage Price FTBs* London 343,614 83, ,589 13,100 South East 214,359 35, ,152 17,300 East of England 192,919 47, ,959 3,100 UK 156,226 24, ,611 87,500 South West 151,406 23, ,048 7,200 West Midlands 138,112 20, ,619 7,200 East Midlands 128,522 18, ,496 6,200 North West 127,815 17, ,064 8,900 3

4 Yorkshire & Humber 126,177 19, ,837 7,300 Scotland 122,979 21, ,420 8,600 Wales 120,041 14, ,661 3,800 North East 108,419 14,550 93,869 3,800 Northern Ireland 92,638 15,556 77,081 2,100 Conversely, the North East and Northern Ireland rank as the least expensive regions for first-time buyer properties. first-time buyer property values stand at 108,419 in the North East and 92,638 in Northern Ireland. Nationally, the average price for a first home stood at 156,226 in the three months to November On average, Londoners put down by far the largest deposit of any region in the three months to November 2015, paying out 83,025 more than five times the size of the average first-time buyer deposit in Northern Ireland ( 15,556). The second-largest deposits are paid by first-time buyers in the East of England. Buyers there paid an average of 47,960 to secure their first home in the three months to November 2015, which equated to almost double the national average ( 24,614). Adrian Gill concludes: The end of 2015 sees the south eastern corner of the UK remain dominant when it comes to property prices. The cultural, financial and political prowess of the capital and its surrounding neighbourhoods in the South East has proved to be an enduring lure for aspirational professionals and successful families. But that s not the whole story. Home values in the East of England and the Midlands have also performed strongly due to a combination of investor interest in the buy-to-let market in those areas and buyers, particularly older ones, seeking a quieter environment, away from the hum-drum of the capital. For first time buyers, all of these factors make buying in and around London particularly tough and explains the comparative strength of first time buyers in northern England, Northern Ireland and other parts of the country. Heat map of first-time buyer purchase prices (3-months to November 2015)* 220, , , , , , , , ,000 Below 100,000 4

5 *This is the average price paid in November Based on CML regional data (released 15 th December 2015) on the number of FTBs in Q and prices paid grossed up to reflect trends in FTBs recorded by Your Move and Reeds Rains Property Services between Q and three months to November 2015 Transactions Purchase Price LTV Deposit Initial Rate Mortgage Payments as % of income Deposit as % of income Mar-11 15, , % 25, % 76.0% Apr-11 14, , % 25, % 75.3% May-11 14, , % 25, % 75.8% Jun-11 18, , % 25, % 75.6% Jul-11 17, , % 25, % 74.1% Aug-11 18, , % 24, % 72.7% Sep-11 18, , % 24, % 72.5% Oct-11 16, , % 25, % 75.2% Nov-11 17, , % 27, % 80.2% Dec-11 18, , % 27, % 80.7% Jan-12 12, , % 26, % 78.0% Feb-12 14, , % 27, % 81.7% Mar-12 24, , % 29, % 84.1% Apr-12 12, , % 24, % 77.4% May-12 17, , % 25, % 76.3% Jun-12 19, , % 26, % 79.1% Jul-12 18, , % 27, % 78.4% Aug-12 20, , % 27, % 81.0% Sep-12 17, , % 25, % 74.2% Oct-12 20, , % 25, % 74.1% Nov-12 21, , % 28, % 82.3% Dec-12 19, , % 27, % 80.6% Jan-13 15, , % 26, % 79.2% Feb-13 15, , % 26, % 79.6% Mar-13 19, , % 26, % 76.7% Apr-13 18, , % 26, % 76.6% May-13 22, , % 27, % 76.9% 5

6 Jun-13 24, , % 29, % 83.2% Jul-13 24, , % 29, % 82.3% Aug-13 26, , % 29, % 80.5% Sep-13 23, , % 28, % 79.6% Oct-13 26, , % 27, % 77.1% Nov-13 26, , % 27, % 76.4% Dec-13 26, , % 26, % 74.6% Jan-14 22, , % 25, % 70.3% Feb-14 22, , % 24, % 68.9% Mar-14 24, , % 24, % 68.6% Apr-14 24, , % 23, % 64.3% May-14 27, , % 24, % 66.1% Jun-14 29, , % 26, % 70.5% Jul-14 28, , % 25, % 66.2% Aug-14 27, , % 26, % 69.9% Sep-14 26, , % 26, % 68.0% Oct-14 28, , % 25, % 66.2% Nov-14 25, , % 25, % 67.3% Dec-14 26, , % 27, % 71.1% Jan-15 20, , % 26, % 70.3% Feb-15 19, , % 25, % 67.4% Mar-15 24, , % 25, % 65.2% Apr-15 23, , % 23, % 62.7% May-15 23, , % 24, % 63.6% Jun-15 29, , % 26, % 68.3% Jul-15 29, , % 26, % 66.6% Aug-15 26, , % 26, % 67.3% Sep-15 27, , % 26, % 66.6% Oct-15 29, , % 25, % 65.6% Nov-15 31, , % 24, % 62.5% ENDS Press contacts 6

7 Adam Kirby, Instinctif Partners, Darius Meehan, Instinctif Partners, Methodology Extensive monthly data from registered first-time buyers in its estate agency brands Your Move and Reeds Rains was used 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. Your Move and Reeds Rains 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 Your Move and Reeds Rains. The figures are not mix or seasonally adjusted, and are subject to revision as more data becomes available. This First Time Buyer Tracker has been prepared by Instinctif Partners for Your Move and Reeds Rains. It has been compiled using information extracted from the management information of Your Move and Reeds Rains. The copyright and all other intellectual property rights in the First Time Buyer Tracker belong to Your Move and Reeds Rains. Reproduction in whole or part is not permitted unless an acknowledgement to Your Move and Reeds Rains as the source is included. No modification is permitted without Your Move and Reeds Rains prior written consent. Whilst care is taken in the compilation of the First Time Buyer Tracker, no representation or assurances are made as to its accuracy or completeness. Your Move and Reeds Rains reserves the right to vary the methodology and to edit or discontinue the First Time Buyer Tracker in whole or in part at any time. 7