First time buyer deposits now nearing £30,000

First-time buyer deposits have climbed 15 per cent in a year to average almost £30,000 according to agency chains Your Move and Reeds Rains.

The average first-time buyer deposit was £29,127 in January, up 7.0 per cent compared to December 2014 and 15.0 per cent higher than £25,314 in January 2014.

First-time buyers are saving the largest amount for their deposit since July 2013, eighteen months ago, as savings from December's stamp duty changes take effect.

This has also helped drive rising purchase prices for first-time buyer homes, which have climbed to a new record. New buyers paid an average of £160,304 in January, 12 per cent more than £143,343 a year ago.

Revisions to the stamp duty slab system have reduced the upfront costs for many first-time buyers, allowing them to divert that cash into a deposit fund. First-time buyers paying the average purchase price would have been liable for stamp duty fees of around £1,600 before the graduated system was implemented, but this would now have been reduced to £700 - saving them roughly £900.

The agencies claims that simultaneously, as wages start to see a significant pick-up in real terms, growing purchasing power is reflected in the average first-time buyer LTV. Loan-to-value ratios have fallen 1.1 percentage points over the last three months, suggesting deflation and growing wages are allowing first-time buyers to put together slightly larger deposits.

Despite this, the average loan-to-income ratio for first-time buyers has risen on an annual basis. On average, deposits now represent 75.4 per cent of a first-time buyer's annual income, compared to 70.6 per cent a year ago.