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Home ownership dream for under 30s gets a boost from Help to Buy

First-time buyers are spending more than £250,000 on their first home

The government’s Help to Buy schemes are helping record numbers of younger first-time buyers get onto the property ladder, new data has revealed.

The Help to Buy Isa paid out more than 60,000 bonuses at an average of £579 each in the past year, with average age of buyers using the scheme now 27.

And almost 10,000 first-time buyers used a Help to Buy equity loan to buy a home in just the last three months of 2016.

More than 12,000 homes were bought using an equity loan in the last quarter of 2016, well in excess of the previous record of 10,786. Of these, 9,897 were purchased by first-time buyers.

While the number of buyers was on the rise, so too was the price they were paying – with the average price exceeding £250,000 for the first time.

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Help to Buy Isa – over 8,000 bonuses paid per month

The Help to Buy Isa scheme supported 45,098 house completions up to the end of December and has been successful in getting younger buyers on to the property ladder.

The median age of buyers using the scheme was just 27, well below the national average of 30.

From its launch on 1 December 2015 to 31 December 2016, a total of 63,196 bonuses were paid, at an average of £579.

The chart below shows the steady numbers of first-time buyers cashing in their Help to Buy Isa in the final months of 2016.

Help to Buy equity loans – are buyers counting the cost?

The Help to Buy equity loan allows first-time buyers and home movers to buy a new-build property with a 5% deposit and benefit from a 20% equity loan from the government.

As of December 2016, 112,338 properties had been bought using the scheme, with 81% of these (90,724) going to first-time buyers.

While the scheme offers first-time buyers the chance to get on to the property ladder, it has faced criticism for inflating the prices of new-build homes.

As the graph below shows, the mean purchase price for a first-time buyer using Help to Buy was £256,641 – well in excess of the average of £196,459 paid by first-time buyers nationally (according to ONS data).

It is open to debate whether this is an example of the price of new-build homes continuing to inflate beyond existing properties, or is instead the result of the equity loan giving buyers the chance to purchase more expensive homes.

In the capital, London Help to Buy, which offers equity loans of up to 40% rather than 20%, has aided 1,556 completions, with loans of between 20% and 40% since it’s launch in February 2016.

The end of the Help to Buy mortgage guarantee

The Help to Buy mortgage guarantee scheme closed for applications at the end of December, having helped 101,960 completions.

While the scheme has supported over £15bn worth of mortgages, the chart below shows a decline in popularity since its peak in 2014.

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