Difficulties in putting together deposits and the General Election put a dampener on the number of first-time buyers completing property purchases in May.
The latest First-Time Buyer Tracker report from estate agents Your Move and Reeds Rains found that transactions for the month were down almost 1% on April but more than 18% less than in May 2014.
The firms found that there were 22,000 transactions but the typical first-time buyer deposit had risen by 4.2% year on year to £25,134 on the back of rising purchase prices.
Adrian Gill, director of Your Move and Reeds Rains, said: “Despite record-low mortgage rates, a growing economy and the start of significant wage growth, the uncertainty surrounding the election seems to have triumphed, albeit momentarily.
“Many pundits predicted a hung parliament, and this political confusion seems to have caused many would-be first-time buyers to keep their powder dry in the run-up to May – until it became clear what the government was and what its housing policies were going to be.”
The report also found that the average deposit as a proportion of annual income rose for the first time in four months to 64.4%
“A more permanent root to the disappointing first-time buyer figures is the challenge of cultivating a deposit,” Gill added. “Many first-time buyers are still on tight monthly incomes, struggling to save while savings rates stay so low. Meanwhile, deposits are rising primarily as property prices continue their seemingly unstoppable upwards march.
“This is wholly due to a lack of housing supply versus a stack of housing demand. If we want to see property prices stabilise and deposits fall as proportions of income, the government must address the housing supply problem, for which there is only one solution: build more homes.”