Numbers of FTBs continue to edge up

A couple of indicators during the week show that the number of first-time buyers (FTBs) continues to rise. First, the volume of market transactions tagged as FTBs in the CSO’s residential property price index.  This is updated monthly and the volume of transactions is shown here on a 12-month basis.

There were 17,500 stamp duty filings tagged as FTBs made in the 12 months to the end of August.  Of these, 12,500 were for existing properties and 5,000 were for new properties.  The increase in the last year has been exclusively in existing properties. 

The volume of FTB transactions has been rising for more than ten years and the total is now pretty much back on the increasing trend evident up to the onset of COVID. 

The second source is the mortgage drawdown data from the Banking and Payments Federation.  This is available quarterly with this week’s update giving figures for Q3 2023.  Again, the figures are presented on an annual basis.  One plus of the mortgage data is that it is available back to 2004 (though the new/existing split is only available from 2006).

The pattern in the mortgage series from the BPF matches that in the volume series from the CSO.  In the year to the end of Q3, there were just over 25,000 mortgage loan drawdowns by FTBs in the BPF data.  This is around 60 per cent of the levels seen during the height of the credit bubble.

There are a number of reasons why the level is higher in the BPF data compared to the CSO (25,000 versus 17,500).  Most of it is likely because they are counting different things: mortgage loan drawdowns versus market transactions.

People who self-build can draw down an FTB mortgage, but obviously there is no market transaction to be included in the CSO data.  FTB mortgages can be drawn down for non-market transactions, such as family transfers or someone may take out a mortgage to renovate a property they received as a bequest.  It may also be that a mortgage drawn down in stages is represented by multiple drawdowns in the BPF data.

With these in mind it could be taken that the CSO figure gives the lower limit for the number of FTBs with the BPF figure giving an upper limit.  The true number of FTBs may be closer to the upper limit.  Whatever about those differences, the trends match, and show both rising.

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