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Mixed picture for first-time buyers at end of 2011

Monday, 26 December 2011 11:38 AM

Homes for first-time buyers are at their most affordable since 2003 but the number who are making it on to the housing ladder has fallen to the lowest level since 1974.

The mixed picture is revealed today in the Halifax First-Time Buyer Review which defines an "affordable" first-time buyer home as lower than 4.0 times average earnings in the area.

And it shows that the average price paid by a first-timer was affordable in 44 per cent of local authority districts in the UK. That compares with 42 per cent in 2010 and just five per cent at the peak of the boom in 2007.

However, the national picture obscures a deep divide between the North, where 75 per cent of districts are affordable, and South, where the figure is just five per cent.

In the meantime the Halifax estimates that the number of first-time buyers fell to just 187,000 in 2011. That is seven per cent lower than in 2010 and less than half the recent peak of 402,800 in 2006.

The average deposit required for a first-timer was £27,032 in the first 11 months of 2011. That was £5,000 lower than last year but still £10,000 higher than in 2007.

Martin Ellis, housing economist at Halifax, said: "Housing 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.

"Nevertheless, 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."

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