Affordability for first-time buyers is the best it has been for 8 years, new figures from Halifax reveal.
The Halifax First-Time Buyer Review, which tracks affordability in 240 local authorities across the UK, has found that the average price of a first property is ëlower than the price someone on average earnings in the area can pay based on the historical average house price to income ratio.í
What this means is that house prices are more affordable than they were for those on an average income.
ìHousing affordability for those looking to get onto the property ladder for the first time has improved significantly over recent years, largely as a consequence of the decline in house prices since 2007,î says Martin Ellis, housing economist at Halifax.
ìNevertheless, conditions for potential first-time buyers remain tough. Difficulties raising the necessary deposit and concerns over the economic climate are preventing many from entering the market.î
The review is based on data from the Halifax’s own extensive housing statistics database, along with data from the Council of Mortgage Lenders, the Office for National Statistics and the Department for Communities and Local Government.
When it comes to affordable housing for first time buyers however, there is still a major North-South divide: 95% of all the UK local authorities that are affordable for first-time buyers are in the North, compared with just 5% in the South. The contrasting fortunes for new property buyers are highlighted by the fact that all local authorities in the North East of England are affordable for first time buyers, compared with none in the London area.
Halifax estimates that there were around 187,000 first-time buyers in 2011: the lowest annual total since records began in 1974 and down 7% on 2010.
Which Way Will House Prices Go?
Peter Bolton King, from the National Association of Estate Agents, believes house price inflation and deflation are not on the horizon as we head in to 2012. He expects that things will pick up gradually over the next year;
“I don’t believe that we will see a significant fall in house prices over the next 12 months as some have feared. But equally, it is unlikely we will see any great upturn to help the market back to full capacity,î he said.