Average price paid by a first time buyer now above £150,000

The average house price paid by a first time buyer (FTB) pushed through the £150,000 barrier for the first time in 2006, according to the Halifax.

The average price increased by 11% in 2006 to £151,565 from £137,122 in 2005. Over the past five years the average house price paid by a FTB has almost doubled, rising by 95% from £77,914 in 2001.

In 2006 the average FTB house price in each region of the UK was more than £100,000 for the first time. The average FTB property price was lowest in Scotland (£108,922) and the North (£109,243) with both these regions seeing a rise in the average FTB price above £100,000 during the year. Five years ago, in all regions of the UK, bar London and the South East, the average FTB paid less than £100,000.

Average first time buyer in London is now liable for 3% rate of stamp duty
The average FTB in London paid more than £250,000 for the first time in 2006 (£250,819). Significantly this is above the 3% stamp duty threshold, highlighting that the average FTB faces a stamp duty bill of at least £7,500 in London. Across the UK, the average FTB faces a stamp duty bill of around £1,500.

The gap between the average income for an FTB and someone in their 20s has widened significantly in recent years

Only 10% of 22-29 year olds, with average full-time earnings of £33,202, had comparable income levels to first-time buyers in 2006. The average first time buyer (FTB) had an income of £29,610 in 2006; 35% more than the average full-time earnings of 22-29 year olds across the UK (£21,913). Five years ago, the average FTB income* was 20% higher than average full-time earnings of 22-29 year olds, while in 1997 the average income of a FTB was broadly in line with the average full-time earnings of 22-29 year olds.

* gross earnings of main FTB mortgage applicant

Number of first time buyers at a twenty six year low of 315,000 in 2006

The number of first time buyers is estimated to have fallen by 7% in 2006 from 340,000 in 2005 to 315,000, the lowest annual total since 1980. The annual number of first time buyers has fallen by 37% since 1997 when there were 503,000 FTBs.

FTBs accounted for three in ten of all new mortgages in 2006 In 2006 FTB mortgages made up 32% of all mortgages in the UK. In 2001 FTBs accounted for four in ten mortgages across the UK (37%).

FTBs put down an average deposit of £28,130 in 2006, equal to 19% of the value of the property

The size of the average deposit has more than doubled over the past five years, rising by 112% from £13,249 in 2001 to £28,130 in 2006.

Average house unaffordable for FTBs in more than 9 out of 10 towns

Halifax calculates that a typical FTB was unable to purchase the average house in 93% of towns in 2006 (482 out of 516). This represents a further deterioration in the affordability situation for FTBs with the average house unaffordable for a typical FTB in 87% of post towns (450 out of 516) in 2005. In 2001, only 37% of towns (190 out of 516) were unaffordable.

Gerrards Cross and Sevenoaks are the UK's least affordable towns for FTBs

The least affordable town for a FTB in the UK is Gerrards Cross in Buckinghamshire where the average property price is 16.7 times the average income of a FTB household. Eight of the 10 least affordable towns are in the South East. The two exceptions are Ilkley and Wetherby in West Yorkshire. Nine towns have a price to income ratio for FTBs above 10 times.

Nelson in Lancashire is the most affordable town in the UK for a FTB

In Nelson, the average property price is 3.4 times higher than a FTB's average income. Seven of the 10 most affordable towns are outside the south of England. The exceptions are Gosport in Hampshire, South Ockendon in Essex and Newham in Inner East London.

Tim Crawford, Group Economist at Halifax, commented: “First time buyers continue to struggle to climb onto the property ladder with the average house price paid by a new buyer entering the market now above £150,000. This is close to double the level of five years ago. First time buyer affordability is now an issue across the UK with the average house price paid by a first time buyer more than £100,000 in each region of the UK for the first time in 2006."