First time buyers get on the ladder with help from the family

55% of today’s first time buyers get family help of some kind to help them onto the housing ladder - but first time buyer homes have become significantly more affordable since the start of the year.

New buyers now need to find £11,000 less than they did in early 2009 once they have arranged their mortgage from the bank or building society.

At the lower end of the market asking prices have fallen 3.7% since January, while further upmarket prices have continued to rise. This is creating new opportunities for aspiring homeowners, and recent data from the CML shows that lending for home purchase has risen for the first time in over two years.

The average first time buyer home was on the market at £160,174 in January. This has now fallen by almost £6,000 to £154,205. This represents 4.8 times first time buyer household income, down from 5.3 times.

Once they have secured their mortgage (based on average household incomes for the 25-34 age cohort, and CML average first time buyer income multiples), the typical first time buyers now have to raise £55,700 from their own resources - a substantial affordability gap representing 1.74 times their gross pre-tax annual income. But this is still over £11,000 less than at the beginning of the year.

In today’s market, most first time buyers turn to their families for help to bridge this affordability gap, according to new research conducted by FindaProperty.com. 37% were funded by the Bank of Mum & Dad, while 8% said they were bankrolled by another family member. In addition, 10% said they received an inheritance which helped towards the deposit.

The easing of first time buyer house prices is largely attributable to the fact that first time buyers have been hardest hit by the contracted employment market, reducing demand for entry level homes.

Michael O'Flynn, Director of FindaProperty.com, said:

"Despite some efforts by lenders recently to launch new products aimed at first time buyers, stricter lending criteria still means that the average new buyer still has to save 1.74 times their gross, pre-tax income for a deposit, which is no mean feat. However, their parents often recognise that the market is beginning to offer good value to first time buyers and this may be the time to take the plunge. Returns on savings in the banks remain extremely poor, so property purchase by their offspring could be a wise financial move."

For more information, visit findaproperty.com/house-prices.html