Property at most affordable in 8 years
Halifax research showed the average house price paid by a first-time buyer in June 2011 was affordable for someone on average earnings in 48% of all local authority districts (LADs).
This is the highest proportion of housing affordable for first-time buyers in eight years and compares with 40% in 2010 and just 6% in 2007.
Some 80% of all LADs in the North of the UK are affordable for first-time buyers - 10 times the proportion of affordable areas in the South (8%)
The North East is the only UK region where all local authority districts are affordable for first-time buyers.
In contrast, London is the only region with no affordable areas for first-time buyers on average earnings.
Despite the improvement in affordability, the number of first-time buyers has decreased slightly over the past year in line with the market.
Halifax estimates that there were around 86,000 first-time buyers in the first half of 2011, a fall of 10% from the same period in 2010 and close to half the number in the first six months of 2007 (181,500).
First-time buyers put down an average deposit of £27,719 in the first half of 2011, equivalent to 21% of the property price.
There are signs that more products for buyers with smaller deposits are being made available.
This is partly reflected in an 8% fall in the average deposit from £30,251 since the same period in 2010.
Halifax also referred to research showing many potential first-time buyers have given up on the possibility of getting on the housing ladder.
Some 77% of non-homeowners still aspire to own their own home, but half (46%) believe that Britain is becoming a nation of renters because of the obstacles facing first-time buyers
Meanwhile 55% believe first-time buyers are too scared of being turned down to apply, despite the fact that Halifax said it accepts eight out of 10 mortgage applications from first-time buyers.
Suren Thiru, housing economist at Halifax, said: "It is encouraging that housing affordability for first-time buyers in general has improved significantly over recent years, as a consequence of the marked falls in both house prices and interest rates since 2007.
“However, there is a distinct North-South divide within this improvement as the majority of affordable areas are in the North."
Stephen Noakes, commercial director of Halifax mortgages, said: "The significant challenges in raising a deposit and widespread pessimism about the chances of being accepted for a mortgage are clearly preventing some potential first-time buyers from even attempting to get on the ladder.
“However there are opportunities for those who do want to own their first home. The key is to provide more information, more education, and more help for non-homeowners in order for them to make the most of those opportunities.”
Halifax said it will be rolling out a spate of new initiatives over the coming months in order to better inform and support first-time buyers who want to get on the ladder, but who are afraid of doing so.
Huw Jones, Sales & Lettings Director at Shaws Estate Agents added: “Property prices outside of London and the South East are largely stagnant and this means average salaries – which are growing by 2.3% annually – are giving buyers more bang for their buck. Within London and the South East there has still been price growth in 2011 although this is now slowing and will lead to greater levels of affordability.
“Add to this the effect of ultra-low interest rates on the cost of mortgage finance and the effect is a significant rise in the affordability of homes.
“In regions where prices have fallen since the beginning of the year, transactions are beginning to pick up, suggesting that many buyers have decided to take advantage of the opportunity to get on the property ladder relatively cheaply.”
