Fastest Rise For 5 Years Among First Time Buyers

Date Published 12 March 2013

The number of first-time buyers in London rose by 15% in 2012, marking the largest annual total since 2007, according to data released by the Council of Mortgage Lenders.

A total of 37,300 first-time buyers bought 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 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.

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