North Lanarkshire is one of the most affordable places for first-time buyers

 
 
Written by Scott Campbell.
Published at 16:54 BST on Tuesday 17th July 2012.

North Lanarkshire is one of the top choices for first time buyers, according to a new Bank of Scotland study.

According to the latest Bank of Scotland First-time Buyer Review, the proportion of Scottish towns and cities that are affordable for first-time buyers has risen to its highest level since 2005.

The average house price paid by a first-time buyer (FTB) in June 2012 was an ‘affordable’ level for someone on average earnings in 93% of all local authority districts (LADs); the highest proportion for seven years, up from 75% a year ago and more than double the proportion of affordable LADs at the peak of the housing market in 2007 when only 43% of LADs were affordable.

Number of first-time buyers increases in 2012

The number of FTBs has risen over the past year, albeit from a historically low level, helped by the improvement in affordability. Bank of Scotland estimates that there were approximately 9,000 FTBs in Scotland in the first half of 2012. This is just over a fifth (21%) higher than in the same period in 2011 (7,700), but less than half the number a decade ago (20,900 in 2002). The recent ending of the stamp duty holiday is likely to have boosted the number of first-time buyers in the first six months of 2012 as some buyers brought forward their purchases to meet the March deadline.

Scotland is the third most affordable UK location for FTBs

The proportion of affordable Scottish LADs (93%) is the third highest among the twelve UK regions and is also close to double the UK average (54%). The North East of England is the only UK region where all LADs are affordable for FTBs. The North West of England has the second highest proportion of LADs (97%), followed by Scotland (93%). In contrast, London is the only region with no affordable areas for FTBs on average earnings.

South Ayrshire is the most affordable location for a FTB

Across the UK, four of the five most affordable LADs for a FTB are in Scotland. South Ayrshire is the most affordable LAD both in Scotland and the UK with an average property price that is 2.47 gross average annual earnings. Stirling is the second most affordable LAD in Scotland (2.64) while Aberdeenshire is the least affordable Scottish LAD (4.31).

Marginal fall in average FTB deposit over the past year

The average deposit in the first half of 2012 was marginally (1%) lower than in the same period in 2011. The average FTB deposit of £19,579 in June was, however, still nearly three times higher than in 2002 (£7,136). Across the UK, FTBs in London put down the largest deposit (£59,221), followed by the South East (£34,843). In contrast, FTBs in Northern Ireland put down the smallest deposit (£16,267).

Over a fifth more FTBs now pay stamp duty

In Scotland 22% more FTBs are required to pay stamp duty as a result of the end of the temporary increase in the stamp duty threshold for FTBs - from £125,000 to £250,000 – at the end of March. In total, 23% of FTBs will now pay stamp duty compared to only 1% during the period of the temporary threshold increase.

North Lanarkshire came eighth in the study by the Bank of Scotland, ahead of South Lanarkshire and Fife, as illustrated by the table below.

Table 3: 10 most affordable LADs in Scotland for First-Time Buyers, 2012 Local Authority District

Price to Earnings ratio

South Ayrshire

2.47

Stirling

2.64

Renfrewshire

2.66

Inverclyde

2.73

East Ayrshire

2.85

Clackmannanshire

2.88

North Ayrshire

2.89

North Lanarkshire

2.90

South Lanarkshire

2.90

Fife

2.93

 

Nitesh Patel, housing economist at Bank of Scotland, said: “With first-time buyers forming a vital part of the Scottish housing market, it is clearly encouraging that the number of those getting onto the property ladder for the first time may well increase this year, albeit from a historically low level. This partly reflects the substantial improvement in home affordability for first-time buyers since 2007, following the fall in house prices over the period.

“However, the continued uncertainty over the outlook for the Scottish economy and the difficulties faced by many in raising the necessary deposit remain significant hurdles for those wishing to buy their first home.”