Research from LSL Property Services shows the average price of a first-time buyer property has also risen by 4.3% to £127,493 and the average LTV fell from 81.1% to 79.7%.
Wealthier buyers pushed up first-time buyer prices in May and the affordability of both deposits and mortgage repayments improved on a monthly basis.
Buyers had to pay less for properties in May than their counterparts in February and March who were pushed to complete before the stamp duty deadline.
Deposits in May represented 71.6% of the average first-time buyer’s annual income, down slightly from 71.8% in the previous month, while mortgage repayments account for 19.6%, down from 21.6% in April.
On an annual basis the affordability of the average house purchase deposit has improved, while the affordability of mortgage payments improved from 22% of the average first-time buyer’s income in May 2011.
The average mortgage repayment rate for first-time buyers fell in May from 5% to 4.9% and the average deposit rose to £25,839.
David Newnes, director of LSL Property Services, said: “May’s rise in first-time buyer transactions shows the strength of underlying demand among those able to put up a large enough deposit.
“As the stamp duty effects began to wither, May saw first-time buyer activity climb back after April’s drop-off as buyers with strong finances who were able to provide large deposits and borrow at lower LTVs entered the market.
“The market is now being driven by buyers with enough money to absorb the additional tax burden. While the number of tenants able to leave the private rental sector remains historically low, those that can are taking the opportunity to enjoy the currently highly affordable mortgage rates on offer.
“With economic fears growing both inside and outside the UK, it’s highly unlikely we’re going to see a base rate rise in the foreseeable future, meaning tracker rate deals are currently offering very low-cost access to finance. When making loans to buyers with large deposits, lenders have shown they are happy to let borrowers take advantage.”
Meanwhile 99.6% of registered tenants stated they wanted to become a homebuyer but only 25% stated they expected to buy within one year, while 50% stated they would make a purchase within five years.
The most common reason would-be first-time buyers are holding off from making a house purchase is their inability to put together an adequate cash deposit.
High transaction costs were cited by 15% of buyers, indicated the return of stamp duty for purchasers below £250,000 continues to weigh on the minds of buyers.
Only 4.7% stated the prospect of falling house prices concerned them, indicating first-time buyers still feel property is a sensible long-term investment.
Newnes said: “The massive gap between those who want to buy and those who can reflects the widespread frustration of many would-be buyers who currently can’t fund a large enough deposit.
“Building up enough cash to satisfy tighter lending criteria is by far the biggest problem facing those hoping to get a foot on the ladder.
“That only a very small proportion of those renting suggested they aren’t purchasing due to worries about the future direction of house prices indicates there’s still plenty of positive sentiment about the property market.
“Buyers clearly still feel buying a house is a good investment, which makes it all the more frustrating that the need to save a large chunk of cash and growing transaction costs are the main reasons they can’t take the plunge.”
LSL’s research claimed the average first-time buyer in May was aged 28 and had an income of £36,069.
The majority of first-time buyers receive help from their families to fund a purchase. Only 39% of first-time purchases were entirely self-funded, while 57% received help in the form of inheritance, or direct assistance with the deposit or mortgage payments. Only 0.6% said they received help from a government first-time buyer scheme.
