First-time house buyers now face £21,000 deposit hurdle
●New entrants to property market struggling to find down payment
First-time buyers need an average deposit of more than £21,000 in order to get on to the first rung of the Scottish housing ladder, according to a new report.
The study by Halifax found the average deposit is £21,565 – typically around 16 per cent of the purchase price.
Those buying their first home make up nearly half of all house purchases financed by a mortgage across the UK, the bank said.
It said its figures showed the market was returning to a level of buoyancy not seen since the financial crash in 2007-8.
However, Scottish Labour warned that young people are being priced out of the market by the need for large deposits and the cost of renting.
Across the UK as a whole, an average deposit of £33,000 is needed, although the figure rises to more than £100,000 in London, according to the Halifax First-time Buyer Review.
The average price paid for a first home is at a record high of £207,693, Halifax found.
The average first-time buyer deposit put down in the first six months of 2017 was £32,899, about 16 per cent of the purchase price. But in London, first-time buyers need to put together a deposit of £106,577 typically, or
26 per cent of the average price of a home.
First-time buyers in Northern Ireland put down the lowest deposits in cash terms on average, at £16,457.
Across the UK, the number of first-time buyers reached an estimated 162,704 in the first six months of 2017, only 15 per cent below a peak seen in the last boom in 2006, Halifax said.
Schemes such as Help to Buy, combined with low mortgage rates, have given aspiring home owners a helping hand in recent years.
Martin Ellis, a housing economist at Halifax, said that for the third time in four years the numbers getting on the housing ladder in the first half of the year have exceeded 150,000 – “a level of momentum not seen since before the financial crisis”.
He said: “High levels of employment, low mortgage rates and government schemes such as Help to Buy have also helped these numbers remain robust.”
But Scottish Labour’s housing spokeswoman Pauline Mcneill said more housebuilding was needed to make buying a home more affordable for young families.
“These figures show how hard it is for young people to get on the housing ladder,” she said. “Young people stuck in expensive private rents will struggle to save up for a deposit this high.
“The issue here is with supply – we need a more extensive housebuilding programme so everybody has the opportunity of a home, not just a roof over their heads.”
As well as the rising cost of rent, the average graduate leaves university in Scotland with around £11,000 of debt, according to figures published last year by Audit Scotland.
Despite concerns over the amount needed for a deposit, the proportion of first-time buyers has grown from 44 per cent to 47 per cent since the launch of Help to Buy in 2013.
There are also signs of firsttime buyers stretching their loans beyond the traditional 25-year term, to cover higher house prices. In 2016, 56 per cent of their mortgage terms were for 25 to 35 years, whereas in 2007, just over a third (38 per cent) of first-time buyer
“These figures show how hard it is for young people. Stuck in expensive private rents, they will struggle to save up for a deposit this high”