The number of first-time buyers climbing onto the property ladder jumped by more than a fifth last year to stand at a seven-year high, figures today revealed.
The Halifax First Time Buyer Review said the number of buyers joining the UK property market for the first time rose by 22 per cent to 326,500 in 2014, which comes on top of a 23 per cent increase the previous year.
The average cost of a home bought by a first-time buyer rose nine per cent to £171,870, compared to a year ago. However, the average cost of a deposit for this type of buyer fell seven per cent over the same period to £29,218.
House prices grew in the first half of the year, spurred by initiatives such as the Government’s Help to Buy scheme. But in the second half of the year fears of a housing bubble saw the Bank of England impose stricter lending limits on borrowers in a bid to cool the market.
Halifax mortgages director Craig McKinlay said: “First-time buyers are vital for a properly functioning housing market.
“Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time, contributing to the significant increase in the number of first-time buyers in the past two years.”
The report said Chancellor George Osborne’s changes to stamp duty last month reduced the average first time buyer’s tax bill by £781.
The average deposit size fell to 17 per cent of the purchase price last year, from 20 per cent in 2013. But this is still much higher than ten per cent in 2007, the eve of the financial crisis, when the average deposit was £17,499.
The average age of a first time buyer was 30, up from 29 in 2011.
Housing Minister Brandon Lewis said: “It is good to see that our efforts to help aspiring homeowners are reaping results. Already, our Help to Buy schemes have supported more than 71,000 homebuyers, the vast majority of whom are first-time buyers and we have kept interest rates low.
“We have also got Britain building again with housebuilding at its highest level since 2007 and planning permissions have been granted for 240,000 new homes in the year to September.”