Under embargo until 00:01 Friday 27th February 2015 February 2015

Stamp duty changes push first-time buyer

deposits to 18 month high January sees average first-time buyer deposit rise to £29,127, 15% higher than a year ago

Average first-time buyer house purchase price tops £160,000 for first time on record

First-time buyer completions fall 19% on a monthly basis, due to dip in applications over Christmas

  Monthly Transactions Average Purchase Price Average LTV

January 2015 21,200 £160,304 81.8%

December 2014 26,100 £154,815 82.4%

1 month change -18.8% +3.5% -0.6 (from 82.4%)

3 month change -26.1% +8.4% -1.1 (from 82.9%)

1 year change -4.1% +11.8% -0.5 (from 82.3%)

First-time buyer deposits have climbed 15% in a year to average almost £30,000, driven by lower stamp duty bills for new buyers, according to the latest First Time Buyer Tracker from Your Move and Reeds Rains.

The average first-time buyer deposit was £29,127 in January, up 7% compared to December 2014 and 15% higher than £25,314 in January 2014. First-time buyers are saving the largest amount for their deposit since July 2013, eighteen months ago, as savings from December’s stamp duty changes take effect.

This has also helped drive rising purchase prices for first-time buyer homes, which have climbed to a new record. New buyers paid an average of £160,304 in January, 12% more than £143,343 twelve months ago.

Revisions to the stamp duty slab system have reduced the upfront costs for many first-time buyers, allowing them to divert that cash into a deposit fund. First-time buyers paying the average purchase price would have been liable for stamp duty fees of around £1,600 before the graduated system was implemented, but this would now have been

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reduced to £700 – saving them roughly £900.

Simultaneously, as wages start to see a significant pick-up in real terms, growing purchasing power is reflected in the average first-time buyer LTV. Loan-to-value ratios have fallen 1.1 percentage points over the last three months, suggesting deflation and growing wages are allowing first-time buyers to put together slightly larger deposits.

Despite this, the average loan-to-income ratio for first-time buyers has risen on an annual basis. On average, deposits now represent 75.4% of a first-time buyer’s income, compared to 70.6% a year ago.

Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “A fusion of economic factors is alleviating some of the financial burden of forming a deposit. Wages are starting to recover and inflation has fallen to a record low, meaning buyers have slightly more cash to play with day-to-day. And stamp duty fees were slashed for many new buyers when the government reformed the old slab system, freeing up further funds. It’s still difficult to save – with savings rates tied closely to the low base rate. But it’s easier to put cash aside than it was a year ago.

“However, property prices have pushed a new record for first-time buyers, meaning these extra funds are being diverted directly into larger deposits. Putting together a deposit to buy a property remains one of the most arduous tasks for prospective home-buyers, and schemes like Help to Buy are essential to allow the swathes of buyers reliant on higher LTV mortgages to get onto the housing ladder.”

First-Time Buyer Affordability

Average deposit

Deposit as proportion of income

Average mortgage rate

Mortgage repayment as proportion of income

January 2015 £29,127 75.4% 3.70% 20.8%

December 2014 £27,278 70.6% 3.70% 20.2%

1 month change +6.8% +4.8 -0.01 +0.6

3 month change +15.5% +9.4 -0.48 +0.1

1 year change +15.1% +4.8 -0.40 -0.2

SEASONAL SLOWDOWN STALLS FIRST-TIME BUYER COMPLETIONS

There were 21,200 first-time buyer completions in January 2015 – 19% lower than 26,100 in December, however this was partly due to a natural seasonal slowing in applications in the run-up to Christmas.

Furthermore, a fall in first-time buyer numbers is to be expected between December and January. Completions fell 18% month-on-month in January 2014, 20% month-on-month in January 2013 and 31% month-on-month in January 2012.

On a more positive note, the most recent Mortgage Monitor from e.surv chartered surveyors reported a substantial pick-up in higher LTV lending in January, which could translate into a pick-up in first-time buyer completions in the next few months. Loans to higher LTV borrowers grew 20.1% between December and January, with 10,064 loans to borrowers with deposits worth 15% or less of their property’s total value in the first month of 2015.

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Adrian Gill, director of estate agents Your Move and Reeds Rains, continues: “Lending dropped away a little in the run-up to Christmas, but approvals have bounced back a little in January, and demand at the bottom of the market remains strong. After the usual seasonal dip we expect completions in this part of the purchase market to reflect steadier front-end sales activity. Slow and steady progress – in line with improving household finances – is the order of the day.”

REGIONAL DIFFERENCES

The average purchase price for first-time buyers in London rose to a new record high of £308,067 in the three months to January 2015 – more than three times the average purchase price in Northern Ireland (£90,241).

On average, Londoners put down a deposit of £73,711 – by far the greatest amount of any UK region. This was more than ten times the size of the average first-time buyer deposit in Wales (£7,032).

Region Average Purchase Price Average deposit Average mortgage Number of FTBs*

London £308,067 £73,711 £234,356 11,500

South East £206,204 £30,063 £176,141 15,300

East of England £171,280 £26,377 £144,903 2,700

UK £154,606 £24,759 £129,847 72,600

South West £149,097 £21,197 £127,900 5,900

West Midlands £132,456 £22,478 £109,979 5,800

East Midlands £132,103 £22,144 £109,960 5,100

North West £124,485 £19,484 £105,001 6,900

Yorkshire & Humber £117,251 £17,796 £99,455 5,700

North East £116,477 £19,200 £97,277 2,800

Scotland £106,471 £14,980 £91,491 6,500

Wales £104,496 £7,032 £97,464 2,800

Northern Ireland £90,241 £11,671 £78,570 1,700

Adrian Gill, director of estate agents Your Move and Reeds Rains, concludes: “Prices have cooled slightly at the very peak of the London market, but the same isn’t true at the bottom end. First-time buyer demand remains strong, boosted by an insatiable appetite for homes. The lure of London as a culture capital and professional hub continues to attract buyers in from other areas of the country, and indeed from other countries – despite the higher average price tag.”

SEE FULL REGIONAL MAP OVERLEAF

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Heat map of first-time buyer purchase prices(Three months to January 2015)*

*This is the total number of FTBs in the three months to January 2015. Based on CML regional data (released 26th November 2014) on the number of FTBs in Q3 – grossed up to reflect growth in FTBs recorded by LSL Property Services between Q3 2014 and the three months to January 2015.

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£220,000 +

£190,000 - £220,000

£160,000 - £190,000

£130,000 - £160,000

£100,000 - £130,000

Less than £100,000

Examples of First-Time Buyer Properties**

** Properties on the market with either Reeds Rains or Your Move estate agents at the time of going to press.

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North East

Three bedroom terrace house

Ferryhill

£39,995

Yorkshire & Humber

Two bedroom apartment

Hull

£36,000

East Midlands

One bedroom flat

Swadlincote

£52,500

East Anglia

Two bedroom house

Great Yarmouth

£70,000

London

First floor flat

Sidcup

£75,000

South East

One bedroom apartment

Waterlooville

£93,000

Transactions Average Purchase Price

Average LTV

Average Deposit

Average Initial Rate

Mortgage Payments as % of

income

Deposit as % of

income

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Mar-11 15,400 £126,244 80.2% £25,059 5.05 21.6% 75.9%

Apr-11 14,300 £130,548 80.5% £25,437 5.06 21.9% 75.2%

May-11 14,900 £130,473 80.4% £25,547 5.03 21.9% 75.8%

Jun-11 18,600 £132,500 80.8% £25,380 5.01 22.4% 75.5%

Jul-11 17,700 £133,181 81.1% £25,165 4.93 22.2% 74.1%

Aug-11 18,300 £135,000 81.5% £24,928 4.86 22.3% 72.9%

Sep-11 18,500 £132,813 81.7% £24,338 4.72 22.0% 72.5%

Oct-11 16,800 £132,500 81.1% £25,036 4.47 21.5% 75.2%

Nov-11 17,600 £134,375 79.9% £27,003 4.33 20.9% 80.2%

Dec-11 18,700 £137,250 80.1% £27,361 4.36 21.3% 80.7%

Jan-12 12,900 £134,915 80.3% £26,551 4.39 21.0% 78.2%

Feb-12 14,000 £135,000 79.7% £27,378 4.44 21.3% 81.7%

Mar-12 24,400 £146,790 79.9% £29,453 4.56 22.5% 84.2%

Apr-12 12,300 £123,744 79.9% £24,854 4.66 20.9% 77.5%

May-12 17,700 £131,250 80.5% £25,574 4.83 21.7% 76.3%

Jun-12 19,300 £137,344 80.4% £26,892 4.92 22.6% 79.1%

Jul-12 18,000 £135,802 79.9% £27,283 4.92 21.6% 78.1%

Aug-12 20,400 £137,250 79.5% £28,136 4.92 22.0% 81.4%

Sep-12 17,600 £135,000 81.3% £25,259 4.86 22.3% 74.2%

Oct-12 20,100 £135,000 81.3% £25,265 4.81 22.1% 74.1%

Nov-12 21,700 £134,079 79.1% £28,043 4.72 21.2% 82.3%

Dec-12 19,500 £136,994 79.9% £27,522 4.61 21.6% 80.6%

Jan-13 15,700 £133,750 79.9% £26,944 4.44 20.8% 79.2%

Feb-13 15,700 £132,813 79.8% £26,875 4.33 20.6% 79.6%

Mar-13 19,500 £135,938 80.6% £26,406 4.29 20.8% 76.7%

Apr-13 18,200 £135,802 80.4% £26,624 4.24 20.3% 76.4%

May-13 22,900 £137,341 80.1% £27,338 4.19 20.0% 77.1%

Jun-13 24,400 £146,250 79.6% £29,842 4.06 20.7% 83.2%

Jul-13 24,200 £144,290 79.5% £29,608 3.99 20.2% 82.6%

Aug-13 26,500 £146,667 80.3% £28,893 3.96 20.6% 80.1%

Sep-13 23,000 £146,719 80.6% £28,412 3.93 20.9% 79.7%

Oct-13 26,400 £146,605 81.1% £27,716 3.94 20.8% 77.0%

Nov-13 26,700 £145,313 81.3% £27,173 3.94 20.9% 76.5%

Dec-13 26,800 £150,875 82.1% £26,961 4.05 21.8% 74.7%

Jan-14 22,100 £143,343 82.3% £25,314 4.10 21.0% 70.6%

Feb-14 22,300 £143,072 82.7% £24,787 4.01 20.9% 69.0%

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Mar-14 24,200 £148,438 83.5% £24,552 4.00 22.0% 69.0%

Apr-14 24,800 £142,857 83.6% £23,500 4.05 20.8% 64.3%

May-14 27,100 £142,941 83.2% £23,978 4.09 20.8% 65.7%

Jun-14 29,100 £154,688 83.0% £26,305 4.16 22.3% 70.8%

Jul-14 28,700 £148,204 82.9% £25,335 4.19 20.7% 66.0%

Aug-14 26,900 £149,256 82.2% £26,635 4.21 20.8% 69.7%

Sep-14 26,200 £151,807 82.7% £26,278 4.25 21.1% 67.9%

Oct-14 28,700 £147,857 82.9% £25,217 4.19 20.7% 66.0%

Nov-14 25,300 £149,092 82.8% £25,659 3.92 20.3% 67.3%

Dec-14 26,100 £154,815 82.4% £27,278 3.70 20.2% 70.6%

Jan-15 21,200 £160,304 81.8% £29,127 3.70 20.8% 75.4%

– ENDS –

Press contactsTora Turton, The Wriglesworth Consultancy, v.turton@wriglesworth.com, 020 7427 1445

Adam Kirby, The Wriglesworth Consultancy, a.kirby@wriglesworth.com, 020 7427 1440

MethodologyLSL uses the extensive monthly data from registered first-time buyers in its estate agency brands Your Move and Reeds Rains to update the CML’s first-time buyer data before the CML’s RMS data is published. The term ‘first-time buyer’ is here denoted by the purpose of a buyer’s registration, rather than their LTV. LSL LTV data has been applied to CML price purchase data to calculate deposit and affordability information. Sentiment and salary data are derived from a survey conducted by LSL. The figures are not mix or seasonally adjusted, and are subject to revision as more data becomes available.

This First Time Buyer Tracker has been prepared by The Wriglesworth Consultancy for LSL Property Services.   It has been compiled using information extracted from LSL’s management information.  The copyright and all other intellectual property rights in the First Time Buyer Tracker belong to LSL.  Reproduction in whole or part is not permitted unless an acknowledgement to LSL as the source is included.  No modification is permitted without LSL’s prior written consent.

Whilst care is taken in the compilation of the First Time Buyer Tracker, no representation or assurances are made as to its accuracy or completeness. LSL reserves the right to vary the methodology and to edit or discontinue the First Time Buyer Tracker in whole or in part at any time.

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