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First-time buyer sales at near two-year high

First-time buyer sales at near two-year high

Category: Mortgages

Updated: 31/05/2016
First Published: 31/05/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

It's notoriously difficult for first-time buyers (FTBs) to take that first step on the ladder, but happily, it looks as though an increasing number are able to get over that first hurdle, with research showing that FTB sales during April were the highest seen in almost two years.

The figures, from the latest First-Time Buyer Tracker from Your Move & Reeds Rains, show that a total of 32,300 completed FTB sales were recorded during April, an increase of 14.9% from March (28,100) and a significant rise of 37.4% year-on-year. Not only that, but it also marks the highest monthly total seen since June 2014 when 33,300 FTB sales were recorded, which highlights the strength of the FTB market and this sector's growing spending power.

But just what's caused such strong growth in FTB sales? Well, analysis suggests that much of it could be due to the implementation of the stamp duty tax hike for additional properties, which has freed up the market for new buyers.

Essentially, now that landlords have to pay more in stamp duty, they've begun to pull back from the market, which means that short-term competition for properties has receded – and given that landlords typically seek prime FTB properties, new buyers now have more choice of affordable homes as a result.

However, the term "affordable" may be contested by some, with the figures also revealing that FTBs paid an average of £168,656 in April, up 1.3% on a monthly basis and an increase of 13.6% year-on-year – equating to an extra £20,000 for a typical FTB home. The average deposit has similarly increased on an annual basis to stand at £27,290 (up 13.8% year-on-year), but encouragingly, this is actually 3.3% lower than the average deposit paid in March, with new buyers not having to stump up quite so much upfront.

"This surge in sales shows that demand is steadfast among first-time buyers, despite upward movement in house prices," commented Adrian Gill, director of Your Move and Reeds Rains. "Subdued landlord demand following the changes is offering some temporary light relief to FTBs; less competition from landlords expanding their portfolios means more houses to buy for first-timers."

But despite these promising trends, it isn't all good news. Adrian added that "a darker long-term picture emerges" beneath the initially positive results, as pushing landlords out of the market will only reduce the supply of affordable rental properties. This will "drive this demand harder still, pushing up rents, and making saving for a deposit for a first home more difficult", he cautioned.

This means it's more important than ever to be organised and disciplined if you're trying to save for a deposit. Save everything you can into a dedicated savings account, and once you've built up a big enough pot, compare first-time buyer mortgages to make that first step on the ladder as affordable as possible.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.