First-Time Buyers Strengthen Housing Market

An increase in first-time buyers have helped to boost Scotland's housing market, according to a new report.

The findings, published by the Council of Mortgage Lenders (CML), revealed that there was a fall in quarter-on-quarter, and year-on-year in house purchases, but in the final quarter of 2014, there was a rise in the number of first-time buyers.

In Q4 of 2014, there were 7,000 first-time buyer loans in Scotland, worth £750m. While this was down compared to the previous quarter (5% in value), it was higher than the level recorded in Q4 2013, with the number of loans increasing by 3% and the amount borrowed by 9%.

Looking at 2014 as a while, the CML said Scotland accounted for 6.6% of UK-wide annual house purchase activity, falling from 6.9% in 2013. Lenders advanced 27,700 loans to first-time buyers in Scotland, totalling £2.9bn. This is an increase of 16% in volume compared to 2013, and 23% in value.

Elsewhere, home movers in Scotland took out 31,800 loans, 5% more than in 2013, with the value of the loans increasing by 10% (£4.6bn).


There were also 23,400 loans advanced for remortgage in 2014, coming to £2.6bn in total. This was down 14% by volume compared to 2013, and 9% down by value.

Overall in 2014, the total number of loans advanced for home-owner house purchase was 59,300, which was up 9% compared to 2013. However, home-owner house purchase in Scotland was found to have fallen in the final quarter of 2014 to 15,000 loans – down 6% on the previous quarter.

Quarter-on-quarter, first-time buyer affordability changed slightly in Scotland with first-time buyers typically borrowing 2.90 times their gross income. This is less than the UK average of 3.38.

The typical loan size for first-time buyers was said to be £97,200 in Q4, down from £98,600 the previous quarter; while the typical gross income of a first-time buyer household was £33,965, compared to £33,520 in the third quarter.

There were 23,400 loans for re-mortgaging homes last year, totalling £2.6bn. This was down 14% in volume compared to 2013, and 9% down in value.

Commenting on the figures, Linda Docherty, Chair of CML Scotland, said: "More people bought a home in Scotland last year than in any year since 2008, with a pronounced increase in first-time buyer activity in particular.

"As in the UK overall, there was a quarter-on-quarter dip in activity in the final quarter of the year. However, with inflation being low, employment increasing and there being signs of growth in household income we believe there are grounds for optimism for continuing growth, albeit at a likely slower rate.

"The introduction in Scotland of Land and Buildings Transaction Tax, replacing stamp duty from April, should help provide a boost to the housing market, which could see half of new borrowers paying no tax when purchasing a home."

(JP/MH)