First-time buyers are joining up to step onto the housing ladder, as almost two thirds (63%) of mortgage completions are in joint names (with two or more people), according to the latest analysis from Halifax.
First-time buyers put an average deposit of £53,414 down last year, £21,000 more than a ten years ago (+67%). Although the average salary is higher than it was a decade ago, now £43,257 (+30%), getting together a deposit large enough to put down on a first home means raising more than a year’s average pay.
Those buying a property for the first time continued to be the majority (53%) of all home loans last year. It was also the highest proportion, since 1995, of all home purchases (with a mortgage). However, the overall number of first-time buyers fell by -21% to 293,339 last year, compared to 2022.
The average house price for buyers entering the housing market in 2023 was £288,136, -5% lower than the previous year. Despite this, house prices for first-time buyers remain over £132,000 more expensive, on average, than ten years ago (+86%).
Flats have increased in popularity as a starter home compared to a decade ago, increasing by 6pp, signalling that flats may be a more accessible property type for new buyers and a lower relative price point. Whereas the number of first-time buyers choosing a terraced home has dropped by -7pp compared to ten years ago.
The average first-time buyer is now over 30 years old in all regions and nations, with the UK average at 32 years old. Kim Kinnaird, Director, Halifax Mortgages said:
“Following a record year in 2021, unsurprisingly in view of the wider economic environment, the number of first-time buyers joining the property market fell again in 2023 to around 293,000. Despite this drop, new buyers made up over half of all home loans. However, to get a foot on the ladder most people are now buying for the first time in joint names.
There are a number of schemes available to support first-time buyers, like the mortgage guarantee scheme, which allows us to offer up to 95% mortgages to first-time buyers and has been extended until June 2025. Alternatively, the First Homes scheme offers discounts on new-build homes to first-time buyers, while shared ownership options allow new buyers to purchase some of the property and rent the rest.
The overall fall in house prices we saw in 2023 will go some way to helping people get on the ladder for the first time – but these buyers are still dependent on a steady supply of properties in their price range, while they are faced with the continued pressure of saving for a deposit, when rent and living costs are high.”
Amanda Bryden, Head of Mortgage Intermediaries, Halifax said:
“We know that first-time buyers can find their way into home ownership difficult and, as a result, they are continuing to seek advice earlier in the home buying process. Brokers are perfectly placed to educate and support people by providing guidance on local markets and sharing insights on the home-buying journey, so people can make the dream of owning their first home a reality.”
Across the UK all regions saw a fall in the number of first-time buyers entering the market last year. The greatest drops were in East Anglia and the South East, both down -24%. Scotland was the most resilient – first-time buyers in the nation fell by -10%.
When looking over the last decade, all regions excluding London saw an increase in buyers purchasing a first property. Northern Ireland was top – +45% – compared to 2013.
Last year, the average cost of a home for a first-time buyer fell from its peak in 2022 (£302,008) to £288,136 (-5%). The average deposit on a first home last year was £53,414 (around 19% of the purchase price on average), in cash terms -£9,057 or -15% less, than in 2022.
Average deposits for first-time buyers in East Midlands fell the most in 2023 (-16%), compared to 2022. London and the South East also had some of the largest deposit falls last year (both -15%) although, at £108,848 and £59,075 respectively, the figures remain the largest by some way for new buyers to save towards a property.
What’s more, terraced homes are most favoured for those starting out with their first home. This type of property made up 30% of all new mortgages for first-time buyers last year, although down -7pp compared to ten years ago.
First-time buyers have also increasingly purchased flats over the past decade, up +6pp when compared to 2013 and increased in every region and nation in the UK. London has seen the greatest increase in first-time buyers choosing a flat to set up home, 72% in 2022 versus 59% in 2013.
Nathan Emerson, CEO at Propertymark, said:
“It is encouraging to see that the economic turbulence of the last three years has not stopped first-time buyers from purchasing over half of all home loans. However, housing still needs to be more affordable for all and for that to happen, the UK Government must place realistic and focused measures in place to meet its target of building 300,000 new homes a year in England. We are also hopeful that inflation starts to drop soon which will ease the additional financial pressure homeowners have been facing, making it easier to move home and secure a better mortgage deal.”
