First-time buyers utilising familial assistance

Research by Find A Property has revealed 55% of first-time buyers get family help of some kind to help them onto the housing ladder, but starter homes have become significantly more affordable since the start of the year.

New buyers now need to find £11,000 less than they did in early 2009 once they have arranged their mortgage from the bank or building society. At the lower end of the market, asking prices have fallen 3.7% since January, while further upmarket prices have continued to rise.

This is creating new opportunities for aspiring homeowners, and recent data from the Council of Mortgage Lenders (CML) shows lending for home purchase has risen for the first time in over two years.

The average first-time buyer home was on the market at £160,174 in January. This has now fallen by almost £6,000 to £154,205. This represents 4.8 times first time buyer household income, down from 5.3 times.

Once they have secured their mortgage (based on average household incomes for the 25-34 age category, and CML average first-time buyer income multiples), the typical first-time buyer now has to raise £55,700 from their own resources - a substantial affordability gap representing 1.74 times their gross pre-tax annual income. But this is still over £11,000 less than at the beginning of the year.

Michael O’Flynn, director of Find A Property, said: “Despite some efforts by lenders recently to launch new products aimed at first-time buyers, stricter lending criteria still means that the average new buyer still has to save 1.74 times their gross, pre-tax income for a deposit, which is no mean feat.

“However, their parents often recognise that the market is beginning to offer good value to first-time buyers and this may be the time to take the plunge. Returns on savings in the banks remain extremely poor, so property purchase by their offspring could be a wise financial move.”