THE number of first-time buyers increased by 12 per cent last year putting figures at a five-year high, according to the most recent Halifax First-Time Buyer Review.
A total of 216,000 bought their first home in 2012, a rise of 23,000 from 193,000 on the previous year. It marks the highest FTB figure since 2007, although it represents a 50 per cent slash on new buyers since 2006 when 402,800 purchased their first home.
Affordability for first-time buyers also remains close to its most favourable level since 2003.
Martin Ellis, housing economist at Halifax, said: "The number of first-time buyers has risen to a five-year high, boosted by the improvement in affordability resulting from the reductions in both house prices and mortgage rates in recent years."
The average house price paid by a first-time buyer in November 2012 was affordable for someone on average earnings: based on the ratio of the average house price to earnings being below the long-term average – 39 per cent of all local authority districts in the UK.
Mortgage affordability has also "much improved" in recent years, says the report. The proportion of disposable earnings devoted to mortgage payments by a new first-time buyer stood at 27 per cent in the third quarter of 2012 – more than half of the peak level of 50 per cent in the second quarter of 2007 and comfortably below the long-term average of 34 per cent.
Nationally, the average house price paid by a FTB in 2012 was £139,921; an increase of three per cent on £136,195 in 2011.
Over half (55 per cent) of all FTB purchases in 2012 were below the £125,000 stamp duty threshold.
Almost four in 10 (38 per cent) properties bought by FTBs were priced between £125,000 and £250,000 and would have been exempt from stamp duty if the temporary increase in the starting threshold had been in place for the entire year.
Mr Ellis continued: "Conditions for potential first-time buyers, however, remain very difficult with problems raising the necessary deposit and concerns over the economic climate continuing to prevent many from entering the market. Despite some positive steps with schemes such as NewBuy, the numbers of those buying their first home remain low by recent historical standards."