Regional data show home-ownership aspirations are still strong
Published: 5 June 2013 | Author: Bernard Clarke
First-time buyer activity in Scotland and Wales increased in the first quarter of this year, according to new regional data we published last week. But in London first-time buyer activity remained stable, while in Northern Ireland there was a dip in the number of purchases.
Our regional data was accompanied by findings from a survey undertaken by YouGov showing that the appetite for home-ownership as the long-term tenure of choice for most adults remained strong around the country.
In London, half of all adults surveyed indicated a preference to buy a new home in the next two to three years. Despite the more challenging conditions for buyers in the capital, a larger proportion of adults in London had aspirations for home-ownership in the short term than in Scotland, Wales, and the UK overall.
First-time buyer activity in London was at a similar level to the same period last year. In total, 9,400 loans were advanced in the first quarter in the capital. But this is a more positive result than the figures initially suggest because first-time buyer activity was boosted in the first quarter of last year by the stamp duty holiday which ended in March 2012.
First-time buyer affordability in London remained tighter than in the rest of the UK. First-time buyers borrowed an average of 3.58 times their income in the first quarter and their mortgage payments, on average, consumed 21% of their income. This was a marginal improvement compared to the fourth quarter of 2012 and is likely to be due to the continuing downward trend in mortgage rates. First-time buyers in London also put down larger deposits – 25% in the first quarter, compared to a UK average of 20%.
Lending to movers in London fell by 9% compared to the first quarter of 2012 and remortgaging was down by 18% over the same period.
In Scotland, our findings from the YouGov survey showed that 78% of adults would like to be home-owners in 10 years’ time, a finding on a par with the rest of Great Britain. The Scottish government recently announced plans to develop a new-build shared equity scheme as part of the Help to Buy package of housing initiatives, which is likely to assist many aspiring home-owners in Scotland to buy their first home.
Our lending figures saw the number of first-time buyers increase in the first quarter in Scotland – up by 10% on the first quarter of 2012. A total of 4,100 bought their first home, but there was a seasonal fall compared to the fourth quarter of 2012.
Distortions caused by the end of the stamp duty holiday in March last year were less pronounced in Scotland than in the UK overall, with lower average house prices meaning that a larger proportion of first-time buyers in Scotland buy properties below the stamp duty threshold of £125,000.
Lending for movers and remortgaging in Scotland was subdued in the first quarter.
In Wales, the YouGov survey showed that more adults are aspiring to be home-owners in the next 10 years than in Great Britain overall. Some 84% of adults in Wales wish to be home-owners in the next 10 years, compared to 79% in Great Britain. As in Scotland, the Welsh government recently announced plans to develop a new-build equity loan scheme and are continuing to discuss options for a mortgage guarantee scheme.
First-time buyer activity in Wales increased in the first quarter of the year. In total, 2,000 loans were advanced to this group in the first three months, a 5% increase on the first quarter of 2012. But this reflected normal seasonal factors, and lending to first-time buyers was down by 20% on the last three months of last year.
Affordability for first-time buyers in Wales was more favourable than in the rest of the UK. They borrowed an average of 3.07 times their income and spent 18.3% of their income in initial mortgage payments in the first quarter, compared to a loan-to-income ratio of 3.23 in the UK and payments consuming 19.5% of a borrower’s income. The loan-to-value (LTV) ratio in Wales for first-time buyers remained at 85% in the first quarter, higher than the 80% LTV seen in the UK overall.
Lending to movers in Wales eased in the first quarter, while remortgaging also fell.
In Northern Ireland, first-time buyers continued to make up a majority of the housing market, with 60% of all house purchase loans advanced to this group. But lending to first-time buyers fell in the first quarter in Northern Ireland with a total of 1,200 loans advanced, a drop of 14% compared to the fourth quarter of last year and 8% compared to the first quarter of 2012.
First-time buyers in Northern Ireland put down an average deposit of 20%, the same as for this group in the UK as a whole. But other affordability indicators remained more favourable. Mortgage payments consumed 17.2% of first-time buyer income in the first quarter, down from 19.1% in the fourth quarter of last year, and lower than the 19.5% in the UK overall.
Lending to movers was down by 11% compared to the first quarter of 2012, while remortgaging decreased by 36% over the same period.