The number of first-time buyers making their first step onto the housing ladder has soared to a six-year high, according to a recent report.
The First-Time Buyer Monitor from LSL Property Services found that 26,100 homes were sold to new buyers in July – an increase of 45% on last year, and the highest level since the autumn of 2007.
The number of valuations carried out for first-time buyers has also rocketed this summer, according to Connells.
The firm’s valuation survey reported a 40% increase in the number of valuations in August from the same month last year and said that the monthly increase in activity 2013 was breaking the mould of the past five years.
The news provides further evidence that the government lending schemes designed to spur the housing market have had the desired effect.
Mortgages have fallen to their most affordable level in a generation, and now account for just a quarter of a new borrower’s income, according to the Halifax Building Society (read more).
This improvement in affordability has opened the door to thousands of potential buyers who had previously found themselves shut out of the market, according to LSL Director, David Newnes.
"Economic confidence is returning, nudging many more buyers in the direction of property, and nudging lenders to offer more loans to buyers with smaller deposits," he said.
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First-time buyer activity has shot upwards thanks to cheaper mortgages, says LSL Property Services.
Prices Rising
The upshot of rising demand, however, is a worrying rate of house price inflation. The LSL Monitor found that the average price for a first-time buyer property had risen to £146,726, which is 6% higher than the average price in 2013, and 8% higher than July last year.
This is supported by the Halifax’s latest house price survey, which found that house prices had risen by 5.4% in the August quarter compared to the same period last year.
Mr Newnes warned that there was a “desperate need” for more affordable housing to match the rise in demand created by cheaper mortgages.
"If supply fails to keep pace with demand the housing market will become increasingly unsustainable," he said.
"Prices will rise sharply, and future first-time buyers will be left in the lurch."
Are you a first time buyer? Check out our new guide, 'First Time Buyers: Where to Begin', and our latest blog article, 'Ways to Improve Your Chances of Getting a Mortgage'.
Keith McDonald
Which4U Editor
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