Fewer house buyers, except first-timers

Cash buyers, landlords and movers have all thinned out, leaving first-time buyers in more control of the housing market.

A very unusual phenomenon has cropped up in the Council of Mortgage Lenders’ latest statistics — in the first quarter of this year first-time buyers with a mortgage actually outnumbered repeat buyers with a mortgage.

Normally — in recent years at least — the number of people getting on the first rung of the ladder is lower than the number of people moving up it.

The inversion suggests FTBs are increasingly absorbing supply from housebuilders, fuelled by Help to Buy, and landlords, who are turning into net sellers.

This graph shows the change in the numbers of different types of buyers from the year to the end of March 2016 to the year to the end of March 2017 (sourced from the CML and HMRC).

FTBs with mortgages are the only group increasing in size, from 318,800 in the year to 31 March 2016 to 347,500 in the year to 31 March 2017.

In percentage terms, the changes are biggest for cash-only buyers (down 21%) and landlords with mortgages (down 49%). FTBs with mortgages are up by 9% and movers with mortgages are down by 8%.

It does not bode well for the momentum of the housing market that the only group growing is the poorest, and that its growth is rather weak.

However, FTBs with mortgages have a median household income of just under £40,000, which in the case of those moving out of rented accommodation is lost to landlords.

Cheekily multiplying that median by the number of FTBs with mortgages (questionable statistically, but interesting for illustrative purposes) gives a figure of £13.8 billion in aggregate household income in the year to 31 March 2017.

The previous year, with a slightly lower median, comes in at £12.5 billion.

It seems logical that the recent levelling-off in rents is not unconnected with the growing amount of income leaving the rented sector as it becomes easier for richer tenants to become first-time buyers.

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