There were around 216,000 first-time buyers in 2012 up from 193,000 in 2011.
Whilst this was the highest annual total since 2007 it was still nearly 50% lower than in 2006 (402,800).
First-time buyer numbers increased by more than the total number of house purchasers, increasing their share from 38% in 2011 to 40% in 2012.
The review shows that affordability for first-time buyers remains close to its most favourable level since 2003. The average house price paid by a first-time buyer in November 2012 was affordable for someone on average earnings - based on the ratio of the average house price to earnings being below the long-term average of 4.0 - in 39% of all local authority districts in the UK.
This compares with just 5% at the peak of the housing market in 2007 but is marginally lower than in 2011 (40%) due to a modest increase in the average price paid by first-time buyers in 2012.
Mortgage affordability has also much improved in recent years. The proportion of disposable earnings devoted to mortgage payments by a new first-time buyer stood at 27% in 2012 Quarter 3; more than half of the peak level of 50% in Q2 2007 and comfortably below the long-term average of 34%.
Nationally, the average house price paid by a first-time buyer in 2012 was £139,921; an increase of 3% on £136,195 in 2011.
Over half (55%) of all FTB purchases in 2012 were below the £125,000 stamp duty threshold. Almost four in ten (38%) properties bought by FTBs were priced between £125,000 and £250,000 and would have been exempt from stamp duty if the temporary increase in the starting threshold had been in place for the entire year.
The overwhelming majority (96%) of FTBs in London bought homes above the £125,000 threshold.
Martin Ellis, housing economist at Halifax, commented: "The number of first-time buyers has risen to a five year high, boosted by the improvement in affordability resulting from the reductions in both house prices and mortgage rates in recent years.
“Conditions for potential first-time buyers, however, remain very difficult with problems raising the necessary deposit and concerns over the economic climate continuing to prevent many from entering the market.
“Despite some positive steps with schemes such as NewBuy, the numbers of those buying their first home remain low by recent historical standards."
