First-timers lead housing market

Home movers and investors have followed the lead of first-time buyers into the housing market, according to research.

Connells Survey & Valuations found that 58% of people requesting its service in the first three months of the year were first-time buyers, some 16% higher than the figure in the opening quarter of 2008.

However, the percentage of first-time buyers began to fade in the second quarter, as home movers and investors rejoined the market. Around 53% of all transactions were first-time buyers in the second quarter, dropping to 46% in July. During this time, there was an overall increase in the number of house purchases.

Home movers accounted for 44% of mortgage valuations by July, an increase of 35% on the previous figure. Around one in 10 valuations were requested by buy-to -et investors in July, up from the previous figure of one in 14.

The volume of activity among first-time buyers is made even more remarkable by the tough lending criteria currently being enforced by lenders. Higher affordability and credit scoring thresholds are being exercised, while a substantial deposit is also required to obtain mortgage finance following the credit crunch, making it hard for first-time buyers to get on to the property ladder.

Data from the Department for Communities and Local Government show house prices are more affordable now than at any time since 2003.

The trends in the data suggest that housing transactions should have increased to almost 40,000 by June, with a similar number in July, up 53% from the record low in January.

Ross Bowen, group mortgage director for Connells, said: "First-time buyers are having a hard time when it comes to obtaining finance but this hasn't stopped them hunting for bargains. For first-timers house prices are cheaper than they have been for years, and there is pent up demand.

"The overall numbers of houses changing hands are recovering, which combined with rising house prices over the last 5 consecutive months is encouraging. However, funding constraints remain a significant barrier to any step change in housing transaction levels."

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