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Scotland is More Affordable for First Time Buyers

East Dunbartonshire is the UK’s most affordable area for first-time buyers (FTBs), according to the latest First-Time Buyer Review from Bank of Scotland. The average property price here sits at £97,089, which is only 2.6 times local annual average gross earnings.

Most Affordable LADs for FTB

As many as five out of the UK’s ten most affordable Local Authority Districts (LADs) for FTB are apparently to be found in Scotland. Copeland in the North West of England is the UK’s second most affordable area (2.9), closely followed by East Renfrewshire (3.0), West Dunbartonshire and Stirling (both 3.1). North Lanarkshire is the UK’s eighth most affordable area (3.3).

Least Affordable LADs

At the other end of the scale, Angus is Scotland’s least affordable LAD for FTB, with a house price to average earnings ratio of 6.1. It is followed by Western Isles (5.8) and East Lothian (5.2).

Perhaps unsurprisingly, the ten least affordable LADs in the UK for FTB are all in London. The least affordable is Brent, where the average FTB property price of £457,014 is 12.5 times gross average annual earnings in the area.  

In Scotland, the average deposit required by a FTB was £21,751 in May 2016, which is substantially less than the UK average of £33,960.

“It’s great news for Scottish First Time Buyers that five of the UK’s most affordable areas are in Scotland, with East Dunbartonshire topping the table,” commented Nicola Noble, Mortgages Director at Bank of Scotland. "Over half of first time buyers in Scotland are below the £125,000 Stamp Duty threshold, compared to the UK average of just under a third. Although many potential first time buyers are facing escalating house prices and deposit sizes, record low mortgage rates continue to make buying seem a more attractive option than renting.”

Mortgage Lending to FTB

The Council of Mortgage Lenders (CML) has also recently released some interesting research relating to first-time buyers. It found that during May this year, FTB borrowed £4.3 billion, which is an increase of 10% compared to April and 23% compared to May last year. This equated to 27,500 loans, up 9% month-on-month and 16% year-on-year.

Affordability metrics for first-time buyers have apparently remained relatively stable. The typical loan size increased to £131,000 from £130,000 in April, while the household income of borrowers also increased slightly from £39,700 in April to £40,000 in May, which meant the income multiple went up from 3.46 to 3.51.

“There was a sense of the market regaining some equilibrium in May, following the stamp duty driven spike in March and the subsequent dip in April,” said Paul Smee, director general of the CML. “For the second month running, first-time buyers borrowed more than home movers, the first time in 20 years that this has been the case. Buy-to-let continues at lower levels as expected, after the change to stamp duty.”

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If you are a first-time buyer looking to buy your first home in Scotland then contact our expert property lawyers today.

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