The number of first time buyers in the UK is at twenty five year low, according to a new report from the Halifax, Britain's biggest mortgage lender.

In 2005, Halifax estimates there were an estimated 320,000 first-time buyers (FTBs) in the UK, the lowest annual total since 1980.  The number of FTBs last year was estimated to be 10% lower than in 2004 (358,000) and 40% lower than in 2002 (532,000). However, first time buyer numbers did start to pick-up slightly in the second half of 2005. FTBs accounted for three in ten of all new mortgages in 2005.

Years to save up

Halifax's research showed that it now takes the typical first time buyer five years to save a deposit.  This assumes that FTBs save 15% of average earnings per year.  Five years ago a typical FTB took three years to save enough money to get the then average deposit of £9,894.  Ten years ago it took the typical FTB two years to save their £5,479 average deposit.

Since 2000, the deposit first time buyers have put down has also significantly increased.  Five years ago, the typical deposit was £9,894, equivalent to 42% of the average earnings. The typical deposit is now £23,967, equivalent to 76% of the average earnings of £31,485.

The average age of a First Time Buyer is 33 years, up from an average age of 31 years in 1995.   The proportion of those aged 25 and under buying their first home remains low, at just 15% of FTB home purchases.  In 1995, 24% of FTBs were younger than 25.

Ouch!  Just too pricey...

The average price paid by FTBs increased by 5% in 2005 to £137,122 from £131,024 in 2004. FTBs in Northern Ireland and the North West experienced the biggest price rises in 2005 with increases of 16% and 12% respectively.

First time buyers spent less than £100,000 on their first home in only two regions of the UK – Scotland (£92,880) and the North (£97,932) in 2005.  In  2000 first time buyers spent less than £100,000, on average, in all regions of the UK, bar London.

The highest prices paid by FTBs in 2005 were in London (£222,005) and the South East (£163,253). Outside London and the South East, FTBs in the South West (£140,260) and East Anglia (£133,104) paid the most for their homes.

Halifax research found that a typical FTB was unable to afford a semi-detached property in 87% of post towns in 2005 (424 out of 486), compared to 41% of towns (199 out of 486) in 2002. Terraced properties were unaffordable for first time buyers in 50% of towns in 2005 on this basis, compared to 28% of towns in 2002.

The least affordable town for a FTB in the UK is Gerrards Cross in Buckinghamshire where the average property price is 17.8 times the average income of a FTB.  Nine of the 10 least affordable areas are in London and the South East, along with Altrincham in Cheshire.

But elsewhere it's cheaper

Nelson in Lancashire is the most affordable town in the UK for a FTB with an average property price 3.3 times higher than a FTB's average income.  Nine of the 10 most affordable towns are outside the south of England with Gosport in Hampshire the exception.

Tim Crawford, Group Economist at Halifax, commented:

“First time buyers need to save harder and for longer than ever before so as to put down a decent deposit on a house. This explains why the number of first time buyers entering the market was close to record lows in 2005."

The Halifax First Time Buyer Annual Review 2006 tracks housing affordability.  Halifax is the UK's biggest provider of First Time Buyer mortgages. The review is based on data from the Halifax's own extensive housing statistics database, the CML and the ONS.