Boom for first-time buyers amid slump

THE number of first-time buyers in Scotland rose by a fifth in the first half of the year as homes became more affordable in most parts of the country, a survey has revealed.

There were more than 9,000 first-time buyers in the first six months of 2012, up 21 per cent from the same period in 2011, when there were 7,700, according to Bank of Scotland.

And the proportion of Scottish towns and cities that are deemed affordable for first-time buyers hit its highest level since 2005.

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The average house price paid by a first-time buyer in June 2012 was affordable for someone on average earnings in 93 per cent of all local authorities, up from 75 per cent a year ago, and more than double the level seen at the peak of the housing market in 2007, when only 43 per cent of areas were affordable.

The survey found that South Ayrshire is the most affordable Scottish area for those getting on to the property ladder, with the average house price at about two and half times the typical income. Aberdeenshire is the least affordable, with house prices outstripping earnings by more than four times.

Nitesh Patel, housing economist at Bank of Scotland, described the figures as encouraging, but said potential first-time buyers still faced “significant hurdles” due to the high levels of cash needed for deposits.

He said: “With first-time buyers forming a vital part of the Scottish housing market, it is clearly encouraging that the number of those getting on to the property ladder for the first time may well increase this year, albeit from a historically low level.

“This partly reflects the substantial improvement in home affordability for first-time buyers since 2007, following the fall in house prices over the 
period. However, the continued uncertainty over the Scottish economy and the difficulties faced by many in raising the necessary deposit remain significant hurdles for those wishing to buy their first home.”

Temporary changes to stamp duty thresholds for first-time buyers earlier this year may also have affected the figures, as research by the Council of Mortgage Lenders out this week suggested.

The Bank of Scotland survey showed that Scotland as a whole is the third most affordable UK region, with 93 per cent of areas having affordable average property prices for first-time buyers.

The north east of England was the most affordable area overall, with 100 per cent, followed closely by the north west of England at 97 per cent.

Tory MSP Alex Johnstone called on the Scottish Government to do more to promote affordable mortgages and to limit what he claimed were excessive deposits. Housing minister Keith Brown claimed the SNP had helped to deliver the increase in the number of Scots able to get on the property ladder.