The number of first time buyer transactions fell by 3.7 per cent to 18,300 in August, returning to their August 2011 level, according to the latest figures from LSL Property Services.
However, the average deposit size fell to £26,285, 8 per cent lower than in July. First-time buyer house prices rose by 4.7 per cent to £141,918 in August.
“There are encouraging signs that lenders are relaxing deposit requirements," said David Newnes, director of LSL Property Services, "but it’s not translating into increasing first time buyer purchases. In fact, following a seasonal drop-off in August, first time buyer numbers are back to their level of a year ago. Lending criteria remains incredibly stringent, and lenders are cherry-picking those new buyers with the very cleanest credit histories and largest incomes.
“We may be seeing lenders begin to react to the Funding for Lending Scheme - but it’s crucial that cheaper finance reaches a much broader selection of new buyers to boost buyer activity and alleviate the pressure on the private rented sector.”
The report also shows that around 94 per cent of registered tenants said they wanted to become a homebuyer, but only seven per cent that they expected to buy this year. More than half believed they would make a purchase within five years.
Prospective first time buyers still see saving for a deposit as the biggest obstacle to buying. A total of 47 per cent of buyers are not able to buy because they cannot put together a big enough deposit, up from 41 per cent three months ago. One in twenty stated the prospect of falling house prices concerned them.
The profile of a first time buyer
* The average first time buyer in August was aged 29 and had an income of £36,000.
* 44 per cent of first-time purchases were entirely self-funded in August but 53 per cent received family help with deposits or mortgage payments or through inheritance.
* Four in ten first-time buyers are buying now because they have only recently been in the financial position to do so
* First-timers were most commonly looking for houses with two or more bedrooms. 28 per cent were looking for a two bed house and 51 per cent were seeking houses with three or more bedrooms.