One-third more first-time buyers will have to pay Stamp Duty this year than last, it has emerged, after the number of first-time buyers fell to its lowest level last year since 1974.
According to the Halifax, around 187,000 people were first-time buyers in 2011, a 7% drop on 2010 and fewer than half of the peak of 402,800 in 2006.
Last year’s figure the lowest the Halifax has recorded since it started tracking the data for the UK.
Despite affordability – measured by average earnings and average house prices in all the different local authority areas – being at its best level since 2003, most of the South of the country is shut to first-time buyers: in 2011, the Halifax says that only 5% of the South was affordable, compared with 75% of the North. London had no affordable areas at all for first-time buyers.
Hefty deposit requirements meant that first-time buyers last year had to find £27,032 on average to put down on a purchase. In 2007, when first-time buyers had to find a 10% deposit as opposed to 20%, the average deposit was £17,482.
Nationally, the average price paid for a first-time buyer property was £135,160, down 3% on 2010.
“Housing affordability for those looking to get on to the property ladder for the first time has improved significantly over recent years, largely as a consequence of the decline in house prices since 2007,” said Martin Ellis, the lender’s housing economist.
“Nevertheless, conditions for potential first-time buyers remain tough. Difficulties raising the necessary deposit and concerns over the economic climate are preventing many from entering the market.”
Significantly, first-time buyers may struggle even more this year than in 2011. The Halifax estimates that 95% of first-time buyers were exempt from paying Stamp Duty in 2011.
Nearly four in ten did not pay any Stamp Duty as a consequence of the temporary increase in the starting threshold for first-time buyers from £125,000 to £250,000.
On this basis, 38% more first-time buyers – and 43% in total – will be required to pay Stamp Duty once this concession ends in March.
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