UK first-time buyers surge amid cheaper borrowing
The number of first-time buyer loans reached 341,068 over the 12 months through January, a fifth more than a year earlier
[LONDON] UK FIRST-TIME buyers made up a record share of home loans last year as easing borrowing costs made houses more affordable, according to a new analysis.
Those looking to step onto the property ladder accounted for 54 per cent of all mortgages in the 12 months through January, lender Halifax said. The number of first-time buyer loans reached 341,068 over the period, a fifth more than a year earlier.
Prospective homeowners returned to the market after Bank of England (BOE) policymakers started easing interest rates from a 16-year high. A resilient jobs market, real wage growth and high savings rates helped boost demand for housing, while rampant rent inflation was also likely to have made mortgage payments relatively more attractive.
The average price paid by a first-time buyer increased to £235,195 (S$406,580) in January, a gain of almost £7,500 from a year earlier. Larger properties were in high demand among this group, with values for terraced homes rising 3.5 per cent. Prices for flats, which outperformed bigger houses in 2023, increased just 1.8 per cent over the past year.
“As interest rates have started to ease, it’s once again those homes offering more space which are fuelling demand,” said Amanda Bryden, head of Halifax Mortgages. “And that’s not just a short-term trend. Over the last decade, bigger properties have tended to outperform smaller homes when it comes to price growth.”
Cheaper borrowing costs boosted demand across the market in the 12 months to January, Halifax said. Average UK property prices increased 3.7 per cent to reach a record £294,818, surpassing a previous peak in the 2022 post-Covid period.
The BOE is expected to provide limited relief. Policymakers are set to keep interest rates on hold on Thursday (Mar 20), as they take a cautious approach to easing in the face of inflationary pressures and heightened uncertainty. BLOOMBERG
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