FIRST-TIME buyers in Scotland face a postcode lottery according to new figures which reveal the average deposit required to purchase a property in Scotland can vary by as much as £31,000.
The most expensive place to buy is Edinburgh where the average deposit is almost £45,000. In the least expensive areas – such as West Dunbartonshire, North Ayrshire and North Lanarkshire – first-time buyers must save an average of £14,000.
The average age of a first-time buyer in Scotland has risen from 29 in 2007 to 31 last year because they must save for longer to raise funds for huge deposits.
Tony Rice, organiser of First Time Buyers Fortnight, a campaign to help first-time buyers get on the property ladder which begins tomorrow, admitted the housing market is a “scary place” and getting on the housing ladder can seem like “an impossible climb”.
Scottish Housing Minister Kevin Stewart said shared equity schemes and a new tax threshold which means first time buyers will pay nothing on transactions up to value of £175,000 from June are “making the housing market more accessible”.
Figures released to the Sunday Herald by the UK’s biggest mortgage lender Halifax show the average deposit required by buyers in all 32 of Scotland’s council areas, as well as the percentage of the value of properties.
Edinburgh is the most expensive location with an average deposit of £44,994 required, while buyers must have an average of around £30,000 to purchase properties in the cities of Glasgow, Aberdeen, Perth and Stirling.
Desirable suburbs such as East Renfrewshire and East Dunbartonshire, and rural Aberdeenshire and Argyll are also expensive, with average deposits of around £30,000.
The least expensive areas are West Dunbartonshire, North Ayrshire, North Lanarkshire and Clackmannanshire where the average deposit is between £14,000 and £15,000. The percentage of the property value required for a purchase is also lower, at around 13 or 14 per cent while in Edinburgh, Glasgow, Stirling and Argyll the average deposit is more than 20 per cent of the property value.
Rice said: “The housing market can be a scary place for those buying their first home and buying in Scotland comes with its own risks. It can seem like an impossible climb for many first-time buyers, but there are lots of different options available to them that they might not be aware of.”
Rice pointed to schemes such as the New Supply Shared Equity initiative, which allows the purchaser to buy a new-build property from a housing association or a housing co-operative.
He said: “First-time buyers can purchase a stake in the property of 60 to 80 per cent. The Scottish Government will have security on the property to cover the proportion it has funded, but a person does not have to pay interest on the Government-funded portion.”
Rice said shared ownership is another option, which sees first-time buyers purchase a percentage of a property and pay rent on the remaining slice.
He added: “These two charges together should equate to less than a monthly mortgage payment on the whole property. Over time a person can buy a larger percentage of your home, this is called staircasing.”
However, the supply of new homes is not keeping pace with demand. In the financial year from April 2016, 17,078 new homes were built, a figure that is only one per cent higher than the previous year and down more than 35 per cent from a decade ago.
The latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey revealed this week that a shortage of homes means house prices are at the highest level in a decade.
Gail Hunter, RICS director in Scotland, said: “Surveyors remain positive about the prospects for the housing market in Scotland. However, they also point to a shortage of properties becoming available for sale, which will have a constraining effect on sales activity and potentially push up prices further.”
However, Halifax managing director Russell Galley said there were 359,000 first-time buyers last year, the highest figure in 10 years
He said: “A flow of new buyers into home ownership is vital for the overall wellbeing of the housing market. This 10-year high in the number of first-time buyers shows continued healthy movement in this key area despite a shortage of homes and the ongoing challenge of saving enough for a deposit.”
Karen Campbell of Homes for Scotland, an umbrella body which represents organisations delivering the majority of the country’s homes, said it’s “encouraging” to see the number of first-time buyers increasing but warned they still face a “huge challenge” to save for a deposit.
“This is where the newbuild sector can provide vital help since those eligible for the Scottish Government’s hugely successful Help to Buy scheme could purchase a new home worth up to £200,000 with just a five per cent deposit,” she added. “With the majority of Scots aspiring to own their own home and increasing housing supply is the single most effective way to address affordability concerns. We hope the Scottish Government will listen to our call to extend the Help to Buy Scheme beyond 2019. Not only will this allow more people to benefit from this support, relieving pressure on other sectors, it will provide builders with the confidence and certainty they need to invest in delivering more of the homes our country needs.”
Housing minister Stewart said the Scottish Government is working “tirelessly” to open up the housing market to as many people as possible.
He said: “Since 2007, over 23,000 households have been supported to purchase a home through our shared equity schemes.
“New powers have been devolved to the Scottish Parliament in recent years – and we made a conscious policy decision to use these to support people at the lower end of the property market. Our Land and Buildings Transactions Tax is significantly more progressive than the old stamp duty that it replaced – with over 25,000 house purchases taken out of tax altogether by October of last year.
“These measures are making the housing market more accessible. Despite the challenging economic headwinds in recent years, the number of first-time buyers purchasing with a mortgage in Scotland rose by 15 per cent in the first 9 months of 2017.”
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