First-time buyer numbers in the UK are continuing to recover, but raising a home deposit is still an issue for many aiming to become homeowners.
That’s the conclusion of the latest House Price Index from the Nationwide Building Society.
Its December report showed that house price growth in that month was up 1.4 percent on the year, the first time in more than 12 months that price growth rose above 1 percent.
1st-time buyer numbers near 2006 peak
Meanwhile, the report also revealed that first-time buyer numbers reached 354,400 in the 12 months to October.
That was more than double the 155,000 in the same month in 2009 and only 12 percent below the 2006 peak for first-time buyers.
However, as more first-time buyers become homeowners, the Nationwide said home deposits and affordability remain out of reach for many. This is particularly relevant in London and the south-east.
Home deposit main challenge
The Nationwide’s chief economist is Robert Gardner. He said: “Outside of London and the south-east, raising a deposit appears to be the main challenge for prospective first-time buyers.
“A 20 percent deposit is equivalent to the entire pre-tax income of an average earner.”
Gardner said the trend for more first-time buyers was down to “robust labour market conditions”. In addition, earnings growth is regaining momentum and low borrowing helps, too.
London out of reach for many
He added: “Even though house prices remain high relative to average incomes, the cost of servicing the typical mortgage as a share of take-home pay has remained close to or below long run averages in most parts of the country.
“The main exception is in London. A period of rapid house price growth in the three years to 2015 means that monthly mortgage payments would also be unaffordable for a large proportion of the local population.”