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First-time buyers at record low

Published:: 15 October 2008
Topic:: News,Money,Mortgages

A record low in the number of first-time buyers getting on to the property ladder during August saw house prices dive by 2.7% compared with the previous month.

Figures from the policy-making body Communities and Local Government show that the average cost of a home dropped to £211,410 during August.

The fall was blamed on the number of people who bought their first home falling to 15,600. This is the lowest number since the Council of Mortgage Lenders began collecting data in 2002 and less than half the 34,800 who bought a property in August last year.

Prospective house-buyers have suffered from a further tightening in lending criteria, with lenders now demanding average deposits of 16% and offering borrowers just 3.18 times their annual income.

Across all buyers, a total of just 42,200 mortgages, worth a collective £6 billion, were advanced for house purchase during August, both new record lows.

Meanwhile, an economist told MPs that house price expectations were a "dominant factor" in the market, and at the moment, buyers and sellers were unable to agree prices because of expectations that property values would fall further.

David Miles, Professor of Finance at Imperial College London, told the Treasury Select Committee: "There is a stand-off in many parts of the country between people who have got a house to sell and people who have got mortgage credit, and they cannot agree on a price."