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Cost to get on the property ladder soars for first time buyers

25 Jan 2020 | News|First Time Buyers

For the average first time buyer getting on the property ladder in the UK is more expensive as prices soared up to 9% last year.

The cost to get on the property ladder for first time buyers increased 9% or £18,252 last year with an average purchase price of £231,455 according to research by Halifax.

Average house price growth in London has been flat, however, for first time buyers prices are up £27,764 or 7% and less affordable with average property values at £453,385.

Deposits are also higher for home buyers rising £3,032 or 7% to an average of £46,187 and London requires the largest deposit of £109,885 higher by £2,016 or 2% last year.

Large rise in first time buyers

The number of first time buyer transactions have increased by 84% over the last decade from 193,940 in 2009 to 356,767 in 2019 despite the significant rise in house prices.

First time buyers now represent 51% of the 699,543 home purchases with the 49% balance made-up from home movers and buy-to-let investors.

Russell Galley, Managing Director Halifax said, this is in part explained by initiatives including Help to Buy schemes and family support mortgages, and the continued period of record low interest rates.

The table from Halifax shows average house prices for different regions and the deposit first time buyers need on average to buy a home in 2019.
Region House prices Deposit
Greater London £453,385 £109,885
South East £295,348 £54,425
South West £221,357 £42,584
East Anglia £220,719 £43,188
West Midlands £185,091 £34,178
East Midlands £181,876 £32,917
Scotland £152,728 £29,950
North West £163,459 £29,472
Yorkshire and Humber £156,323 £27,598
Wales £153,267 £25,704
Northern Ireland £136,850 £25,317
North £136,104 £24,091
Over the past ten years Greater London has seen house prices rise 101% from £222,107 to £453,385, the South East with a rise of 73% to £295,348 and the UK as a whole with 67% rise or £92,823.

These strong improvements in property values allows the equity release mortgage buyer to access money and use this to consolidate debt, for home improvements or holidays.

For remortgage buyers at the end of your mortgage deal, the higher prices and low mortgage rates mean you can release capital which they can use to improve their home.

Affordability differs across the country

Measuring affordability usually uses the ratio of house price to earnings with Burnley in the North West leading with 3.1 and the majority of the top ten affordable UK regions are in Scotland and Wales.

North Ayrshire in Scotland has a ratio of 3.3 with Merthyr Tydfil at 3.4 and the most unaffordable regions not surprisingly are in London and the South East.

Hackney in London has the highest ratio in the country at 12.1 followed by Brent at 11.6, Lambeth on 11.1 and the highest in the South East is Oxford on 10.3.

There are 10 regions that have improvements in affordability, surprisingly Kensington and Chelsea with a -43% change from a ratio of 10.9 in 2009 a decade later.

In Kensington and Chelsea house prices for first time buyers have increased from £480,454 ten years ago to £693,905 so out of reach for most, it is just that the average earnings have risen from £44,014 to £111,063 during this time.

Eden in the North West is more affordable over the decade falling -27% from 7.3 to 5.3 and in the long term more support is needed to counter the shortage of new affordable homes for first time buyers.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or a buy-to-let investor.

Learn more by using the property value tracker chart, mortgage costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to improve your quality of life or pay for care at home.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


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