There was a significant rise in the number of first-time buyers in London last year, according to new data released today by the Council of Mortgage Lenders. The figures reveal that the volume of first-time buyers in London rose by 15% in 2012, with a total of 37,300 first-time buyers acquiring a home in London in 2012, up from 32,400 in 2011. On a quarterly basis, first-time buyer activity increased, while home mover lending fell and remortgage lending remained stable. In the fourth quarter, a total of 10,200 first-time buyers bought their first home in London, a 4% increase compared to the previous quarter, and up by 17% on the fourth quarter of 2011. This represented a larger boost compared to the UK overall where lending to first-time buyers increased by 14% compared to the fourth quarter of 2011.
It was also the largest single quarter for first-time buyer activity since the last quarter of 2009 – when activity was boosted prior to the end of the previous stamp duty holiday.
First-Time Buyer Affordability
First-time buyer affordability in London remained tighter than in the UK overall. First-time buyers in London borrowed an average of 3.59 times their income in the fourth quarter and their mortgage payments typically consumed 21.2% of their income. This compares to an average income multiple of 3.26 and 20% of income taken by mortgage payments for all first-time buyers in the UK.
First-time buyers in London also put down larger deposits than in the UK overall. The average loan to value ratio remained at 75% in the fourth quarter and 2012 overall, compared to 80% in the UK.
CML Report – First-Time Buyer Activity in London
Half of all first-time buyers in London bought properties priced between £125,000 and £250,000. This was a similar proportion to the UK at 47%, but first-time buyer activity was significantly different for properties priced below £125,000 and above £250,000. While in the UK around 40% of first-time buyers typically bought properties for less than £125,000, in London almost no (4%) first-time buyer purchases were in this band, with the remainder at above £250,000. At the other end of the scale, 8% of first-time buyers in London bought properties valued at more than £500,000, compared to just 2% of these borrowers in the UK. CML director general Paul Smee said: “These figures show that first-time buyers in London are regaining their confidence and returning to the market. Even though property in London remains more expensive than in the rest of the UK, low interest rates and the increased availability of high loan-to-value mortgages for borrowers with smaller deposits has enabled more aspirational homeowners to enter the market than any time in the last five years.”
Article courtesy of Property Investor Today“”
