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| First-time buyers are buoying the housing market with enthusiastic purchases CREDIT: PHOTOLIBRARY.COM |
First-time buyers borrowed more money than ever before to get on the housing ladder last year, defying fears of a slowdown to boost the market further, according to industry figures.
A record £53.6bn of mortgage loans went to new property owners in the year, a rise of 13.5pc compared with 2015 and the highest level since the Council of Mortgage Lenders’ (CML) data began in 2006.
December’s borrowing of £4.8bn was also a record month for first-time buyers, helping propel the market to new heights.
House prices picked up again in December, the Office for National Statistics said, growing by 7.2pc in 2016.
The average property now costs £220,000, up £3,000 compared to the previous month and up £15,000 year on year.
Figures for January from Nationwide and Halifax both indicate some slowing in the market in the new year, but the full-year ONS numbers indicate a degree of resilience in a sector that had been battered by tax changes and the Brexit referendum last year. Prices had briefly dipped from July to October before resuming an upward trend.
Some parts of the market are growing more slowly.
Although first-time buyer numbers are surging, the pace of growth by home-movers is more modest.
Those who were moving house borrowed £74.2bn last year, up only 2.2pc on the year, the CML said.
Those figures do flatter the state of the market, however. The value of lending is up in a large part because property prices are rising rapidly.
By volume, the number of home sales only increased very slowly.
A total of 801,600 properties changed hands with a mortgage in 2016, up by less than half of one per cent from 798,100 in 2015, according to the CML.
First-time buyer numbers increased by 8.4pc to 339,100. But the number of home-movers dropped by 2pc to 360,400.
The number of buy-to-let investors also dropped by 13.2pc to 102,100 for the year, hit by changes on stamp duty on second homes.
Remortgaging was a different story with 385,000 owners changing to a different mortgage - the largest number since 2009 - rolling over £66.3bn of debts.
Analysts expect house prices to keep on rising.
“These figures highlight the supply and demand gap, which continues to support runaway house price inflation. For as long as demand outstrips supply, this trend will continue,” said Jeremy Duncombe from brokerage the L&G Mortgage Club.
“The government’s recent Housing White Paper has promised some solutions, including help for smaller developers, but it still feels evolutionary not revolutionary. The topics of stamp duty, planning and the green belt may need to be looked at again if we really want to fix our broken housing market.”
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