The average age of a first-time buyer is on the rise in the UK, with reports stating that the average buyer is 34 years old when they purchase their first property. This is higher than in previous years, as the average age was only 26 years old in 1997. This rise can be attributed to the increased number of young people that are renting, as this limits the income that they can save for a mortgage.
Buyers need to put down deposits on their houses to secure the purchase, which can vary in amount depending on the percentage that the buyer is able to pay. The average deposit that buyers put down on their first house during 2020 was £57,728, although this amount was largely influenced by the large deposits put down on London properties.
In this article, we’ll look at the worst areas to buy a house if you are a first-time buyer, whether you want to buy a city-centre apartment or a cottage in a rural village. We’ll also look at the regions that are cheaper options for buyers unable to pay a large deposit.
Where are the worst areas for first-time buyers?
There are various locations around the UK that have a poor income to house price ratio. Oxford has topped the list for many years as the least affordable place to live, although Winchester pushed it off the top spot in 2021. However, in terms of deposit size for houses, London is clearly in the lead as the average deposit size in the capital is 27%. This means that hopeful buyers will have to fork out an average deposit of £130,357 for a house worth £489,008
The South East requires an average deposit of 20% on houses, which is the same as several other regions, such as the West and East Midlands and Wales. However, the average house price in the South East is higher than these other locations, which pushes up the cost of a deposit for first-time buyers.
Continue reading to find out the average price that first-time buyers pay for houses throughout the UK, as well as the government initiatives that are designed to help those looking to get their foot on the property ladder.
What’s the average property price range for a first-time buyer?
The property market varies throughout the country, which means that first-time buyers will have to take this into consideration when considering the location that they would like to move to.
Northern regions have notoriously cheaper properties than areas further south. For example, first-time buyers in the North can expect to pay £29,563, which is a 20% deposit on the average house price of £147,081. This is a fraction of the 20% deposit that most buyers put down on the average house in the South East, which is £64,910.
Buyers can expect to pay a similar price in Northern Ireland as they would in the North of England. Halifax released data showing that the average deposit for first-time buyers in Northern Ireland was £29,523, which was the cheapest out of all the regions in the UK.
The South West has a slightly higher deposit percentage of 21%, which means that first-time buyers usually have to pay £51,397 on an average house costing £239,716. This places the South West as the third least affordable region for first-time buyers looking to purchase a house.
Scottish houses cost an average of £155,411, while buyers purchasing a house for the first time usually put down a deposit of 23%, which equates to £35,745. After London, this is the second-highest deposit that is put down by new buyers on their first house.
Mortgages usually take between 25 and 30 years to pay off. The amount that homeowners pay per average mortgage payment will vary depending on the property value, deposit and other factors such as their mortgage interest rate.
What are the government schemes for first-time buyers?
There are several schemes led by the government to assist people looking to buy a property for the first time. The Help To Buy ISA and the Lifetime Individual Savings Account (LISA) involves an individual putting aside a certain amount of money each month, which is then added to by a contribution made by the government.
You can add up to £4,000 each year to the LISA account up until the age of 50 years old. The government will then pay a 25% bonus onto the amount that has been saved, up to £1,000. The Help To Buy ISA scheme is no longer available to further account holders, but individuals who opened an account before November 2019 are still eligible to claim an extra 25% of their savings from the government.
Another scheme that is available in England and Northern Ireland is the Right to Buy and Right to Acquire scheme. People living in council houses or tenants in a housing association are able to buy the property they live in at a discounted price.
Where are the best areas for first-time buyers?
On average, houses can vary between 3.1 to around 11.9 times the average earnings in a local area. Derry, Carlisle and Bradford are amongst some of the most affordable locations to buy a house due to the low cost of properties in relation to local wages. On average, houses in Derry, Northern Ireland, cost £155,917, whilst the property market sees an average price tag of £163,232 for houses in Carlisle. Bradford is only slightly more expensive at £164,410. First-time buyers in these areas have a better chance of affording properties because wages in the cities have a better ratio to house costs than in other areas.
London is the city with the highest number of first-time buyers, with over 60,000 individuals having bought a property. This is largely thanks to the career prospects in the city, which attracts people from all over the UK.
Northern regions are also desirable locations for people wanting to buy their first house because the property prices are cheaper than elsewhere in the country. However, they may not be as many job opportunities, which means that commuting expenses are something that buyers will also need to consider.
The average monthly net salary and average monthly mortgage cost vary from region to region, which can change the affordability factor of houses between individuals.
Various banks and estate agents often compile a first-time buyer index to help you find out the housing prices in areas throughout the UK. They can include property price per square metre, as well as average local salary
Purchasing a house for the first time is an exciting step, but there are clearly regions in the UK where it is easier to buy a property than others. The average costs of properties vary up and down the country, with the northern regions being far cheaper than the South East and London. However, the buyer’s average income has a large part to play in whether a region is affordable or not. The house-to-buyer income ratio is far larger in cities such as Oxford and Winchester.
Although London has the highest number of first-time buyers anywhere in the country, this doesn’t mean it will be the most affordable. The average monthly mortgage payment and monthly bills will be more expensive in the capital, as jobs and houses are in high demand.
The things that need to be weighed up when viewing houses is the state of the local housing market, the area’s average income and the average price of the house and the deposit required.