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FTB affordability improving

FTB affordability improving

Category: Mortgages

Updated: 28/12/2011
First Published: 28/12/2011

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Affordability for first time buyers is at its most favourable level since 2003, according to new figures.

The research from Halifax revealed the average house price paid by a first-time buyer in November was affordable for someone on average earnings in 44% of all local authority districts in the UK, the highest proportion for eight years.

This compares with 42% in 2010 and just 5% at the peak of the housing market in 2007.

Nonetheless, the number of first-time buyers continues to decline, with the lender estimating that there were around 187,000 first-time buyers in 2011, the lowest annual total since records began in 1974.

Much of the fall has been attributed to the average deposit of £27,032 that first-time buyers have had to find in 2011.

Whilst this was 15% (£4,873) lower than in 2010(£31,905), it compares with £17,482 in 2007.

As a proportion of the purchase price, the average deposit has increased from 10% in 2007 to 20% in 2011.

Notwithstanding better affordability, Halifax estimates that there were around 187,000 first-time buyers in 2011: the lowest annual total since records began in 1974, 7% lower than in 2010 and less than half the recent peak of 402,800 in 2006.

"Housing affordability for those looking to get onto the property ladder for the first time has improved significantly over recent years, largely as a consequence of the decline in house prices since 2007," said Martin Ellis, housing economist.

"Nevertheless, conditions for potential first-time buyers remain tough. Difficulties raising the necessary deposit and concerns over the economic climate are preventing many from entering the market."

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