Halifax research showed the average house price paid by a first-time buyer in June 2011 was affordable for someone on average earnings in 48% of all local authority districts.
This is the highest proportion of housing affordable for first-time buyers in eight years and compares with 40% in 2010 and just 6% in 2007.
Some 80% of all LADs in the North of the UK are affordable for first-time buyers - 10 times the proportion of affordable areas in the South (8%).
The North East is the only UK region where all local authority districts are affordable for first-time buyers.
In contrast, London is the only region with no affordable areas for first-time buyers on average earnings.
Despite the improvement in affordability, the number of first-time buyers has decreased slightly over the past year in line with the market.
Halifax estimates that there were around 86,000 first-time buyers in the first half of 2011, a fall of 10% from the same period in 2010 and close to half the number in the first six months of 2007 (181,500).
First-time buyers put down an average deposit of £27,719 in the first half of 2011, equivalent to 21% of the property price.
There are signs that more products for buyers with smaller deposits are being made available.
This is partly reflected in an 8% fall in the average deposit from £30,251 since the same period in 2010.
Halifax also referred to research showing many potential first-time buyers have given up on the possibility of getting on the housing ladder.
Some 77% of non-homeowners still aspire to own their own home, but half (46%) believe that Britain is becoming a nation of renters because of the obstacles facing first-time buyers.
Meanwhile 55% believe first-time buyers are too scared of being turned down to apply, despite the fact that Halifax said it accepts eight out of 10 mortgage applications from first-time buyers.
Suren Thiru, housing economist at Halifax, said: "It is encouraging that housing affordability for first-time buyers in general has improved significantly over recent years, as a consequence of the marked falls in both house prices and interest rates since 2007.
“However, there is a distinct North-South divide within this improvement as the majority of affordable areas are in the North."
Stephen Noakes, commercial director of Halifax mortgages, said: "The significant challenges in raising a deposit and widespread pessimism about the chances of being accepted for a mortgage are clearly preventing some potential first-time buyers from even attempting to get on the ladder.
“However there are opportunities for those who do want to own their first home. The key is to provide more information, more education, and more help for non-homeowners in order for them to make the most of those opportunities.
“It is with this intention that we have launched the Halifax First Time Buyer Pledge".
The Halifax First Time Buyer Pledge has four declarations including agreeing to let borrowers know the criteria used to assess applications; providing a personalised mortgage promise for how much the bank will lend without leaving a lasting record on borrowers’ credit profiles; if the application is unsuccessful Halifax will help the borrower understand why; and, whether the application is successful or not the lender will provide clients with an action plan to move forward.
In order to support that pledge, Halifax said it will be rolling out a spate of new initiatives over the coming months in order to better inform and support first-time buyers who want to get on the ladder, but who are afraid of doing so.
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, added: “Property prices outside of London and the South East are stagnant and this means average salaries – which are growing by 2.3% annually – are giving buyers more bang for their buck.
“Add to this the effect of ultra-low interest rates on the cost of mortgage finance and the effect is a sharp rise in the affordability of homes.
“In regions where we’ve seen prices fall since the beginning of the year, transactions are beginning to pick up, suggesting that many buyers have decided to take advantage of the opportunity to get on the property ladder relatively cheaply.
“But this doesn’t tell the full story. As banks and building societies worry about their own balance sheets and economic growth remains shaky, lending is subdued.
“This means mortgage criteria are tough, so only a limited number of first-time buyers are able to get access to cheap finance and affordable properties. Those who can’t get a mortgage are forced to keep renting and this has pushed rental prices to record highs.
“It’s great news that property is so affordable at the moment, but for those who cannot access mortgage finance or save for a deposit because they are having to pay higher rents, the current market is both frustrating and expensive”.
House Prices
Nationally, the average house price paid by a first-time buyer has fallen by 4.1% (£5,732) over the past year from £140,883 to £135,091.
Over the past decade, first-time buyer property prices have risen by 76% from £76,855 in 2001 to £135,091.
Deposits and Advances
The average first-time buyer deposit in the first six months of 2011 was £27,719. This was more than double the average of £12,874 in 2001.
First-time buyers in the capital put down the largest average deposit - £57,579 - 24% of the property value.
In contrast, first-time buyers in the North put down the smallest average deposit - £15,966 - 16% of the property value.
The average mortgage advance is £107,371, down 3% on a year ago but up by 68% (£43,390) compared with a decade ago.
Age
The average age of a first-time buyer is 29 years old. First-time buyers in Yorkshire and Humber and Wales are, on average, the youngest at 27 year olds.
Regionally, the average age of a first-time buyer is highest in London, at 31.
An increasing number of first-time buyers require financial assistance to raise funds for a deposit.
The Council of Mortgage Lenders estimates that 84% of first-time buyers under 30 had help with their deposit in 2010 compared with 38% in 2005.
The typical age of those first-time buyers who did not receive assistance increased from 28 to 31 over the same period.
Mortgage Affordability
The proportion of disposable earnings devoted to mortgage payments by a potential new first-time buyer stood at 27% in 2011 Quarter 2 - almost half of the peak level of 50% in September 2007 and below the long term average (34%).
Stamp Duty
Some 95% of first-time buyers were exempt from paying stamp duty during the first half of 2011.
Nearly four in 10 (38%) first-time buyers have not paid any stamp duty as a consequence of the temporary increase in the threshold for first-time buyers from £125,000 to £250,000.
Those getting onto the property ladder in the South East have benefited most from the change in the threshold with 73% of first-time buyers in the region exempt from paying stamp duty as a result of the temporary increase.
