The number of first time buyers actively looking to purchase a property in London has dropped off significantly in 2010, as a lack of rising prices has hit demand, according to estate agent Marsh & Parsons.
In January 2009, first time buyers comprised 17% of new buyer registrations at Marsh & Parsons, but while there are plenty of buyers registering (over 2,600 so far in 2010), this number fell to 10% in January 2010 – and below one in ten in February. However, with so few London properties in the lower price threshold, the end of the stamp duty ‘holiday’ at the turn of the year has not played a significant part in this drop-off.
Between January 2008 and April 2009, house prices fell by up to 30% in some parts of London, and last year this improved affordability led to a large increase in demand from first time buyers, looking to get onto the property ladder. In August 2009, first time buyers made up almost one in five new registrations (19%), reaching a peak. However, strong house price growth in the capital since spring 2009 (up £39,602 or 13% on average) is now deterring growing numbers of first timers.
Peter Rollings, managing director of Marsh & Parsons, commented: “Central London may not be typical first time buyer territory, but it’s little wonder why. Mortgage lenders now typically require a 25% deposit from first time buyers, meaning they would need to put down over £84,000 to purchase the average London property – realistic for only the tiny minority with substantial parental assistance.
“The end of the stamp duty holiday has not had a great impact on demand, as so few purchases were eligible for exemption. The lack of homes priced below £175,000 meant only 13% of London transactions benefited from stamp duty relief in the first year of the holiday – and only 22% of these purchases were in Inner London boroughs. Higher average house prices mean London is the area where first time buyers are most in need of support and, if the government is serious about helping them, it must reintroduce the stamp holiday and – crucially – take into account the wide regional variations in prices.”