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First time buyers are not deterred by rising house prices

Transactions bounced back strongly for first time buyers in the second half of 2020 despite a 10.0% rise in house prices.

Despite the average 10.0% rise in house prices during 2020 first time buyers bounced back strongly up 52% from 121,050 to 183,607 in the second half of the year, according to Halifax.

Over the year first time buyer numbers were down -13% to 304,657 compared to 351,260 in 2019 although comparing the last six months the numbers were lower by only -2%.

The biggest fall in numbers was for Northern Ireland down -23%, Wales lower by -23% and Scotland by -21% whereas London was down the least at -6% over the year.

Average deposits rising for buyers

Throughout the UK the average deposit for first time buyers was £57,278 increasing 23% or £10,829 last year with the highest amount by value in Greater London up 18% at £20,211.

This table from Halifax first time buyer deposits and how these have changed from 2019 to 2020.
Town Deposit Change %
Change £
Wales £32,663 25% £6,634
North £29,563 24% £5,775
West Midlands £42,062 24% £8,054
South West £51,397 21% £8,893
Yorkshire & Humber £33,313 19% £5,305
South East £64,910 19% £10,256
Scotland £35,745 19% £5,644
Greater London £130,357 18% £20,211
East Anglia £51,126 18% £7,652
East Midlands £39,052 17% £5,783
Northern Ireland £29,523 17% £4,196
North West £34,347 16% £4,829
Buyers in Wales had the biggest percentage change up 25% or £6,634 with average deposits of £32,663 followed by the North and West Midlands up 24%.

This would apply to buy-to-let investors as they would need to compete with higher prices and have the resources to place a larger deposit.

The largest average deposit is Greater London with £130,357 followed by the South East requiring £64,910 which has increased by £10,256 over the year.

See how much you can borrow and stamp duty to get on the property ladder for your first home at this link:
First time buyer calculator with instant results and figures for your new home

Help with increasing deposits comes from family members as the equity release buyer can access cash using a lifetime mortgage and gift to a child or grandchild.

House price growth strong in 2020

The recovery in demand after lockdown during 2020 has kept house prices rising with average values for first time buyers increasing 10% or £22,939 and house prices at £256,057.

As a percentage the biggest rise in house prices was the West Midlands up 11% or £19,565 increasing from £185,682 to £205,246 and the smallest is Scotland rising only 1%.

Greater London had the largest rise in house prices by value of £33,486 or 7% with average prices rising from £455,611 to £489,098.

For home movers intending to trade up for a larger property during times of rising values, they would require having a larger deposit or increase their mortgage.

If you are a remortgage buyer in London the rise in house prices can let you release capital for home improvements such as a loft conversion to create extra space for an office.

The least affordable local authorities are all in London with Islington and Brent with house prices 11.9 times the local average earnings, then Hackney on 11.8 and Haringey with 11.5 times.

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.

For equity release buyers our London City Mortgage advisers can make recommendations with the lifetime mortgage quote allowing you to receive cash from your property for home improvements, holidays or purchase a new car.

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.

Mortgage Best Buys

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

1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%
1.19% 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%

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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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