Huge rise in first time buyer transactions

There were 78.6% more transactions in April 2013 than a year ago, when there were just 12,300 transactions. 

However this figure is distorted, due to an artificial spike in first-time buyer numbers in March last year caused by the implementation of new stamp duty rules on the 25th March 2012, introducing a 1% stamp duty on properties valued between £125,000 and £250,000.

Considering this, it is all the more impressive that the total transactions in the first four months in 2013 has increased so significantly. The first four months of 2013 saw 72,900 borrowers secure a deposit for their first home, 15% higher compared to 63,300 in the first four months of 2012. First-time buyer lending so far this year is far stronger, even though the number of transactions in the first three months of 2012 was artificially high, thanks to the rush to beat the end of the stamp duty holiday.

David Newnes, director of LSL Property Services, owners of estate agents Your Move and Reeds Rains, said: “Transactions among first-time buyers increased significantly in April as an improvement in the availability of high LTV mortgages allowed more first-time buyers to realise their dreams of homeownership. Increased lender confidence has lead to lower rates and a wider range of first-time buyer mortgages. The result: a super-strength opening to 2013 that has seen 15% more first-buyers than last year.

“But weak wage growth and rising house prices are stymieing first-time buyer lending, and keeping a lid on a market that could otherwise be boiling away happily, by preventing further transactions. Mortgage rates may be at record lows but repayments are equal to a larger proportion of the average first-time buyer’s wage. And the size of the deposit they must save before they can purchase has increased both in monetary value and as a proportion of wage – a second blow for potential buyers that is large enough to knock many out of the ring and prevent them from buying.

“Schemes like to Help-to-Buy are designed to launch a counter-offensive on deposit requirements. But the scheme may actually inflate property prices, so may turn out to be counter-productive.”