Single first-time buyers struggle to buy a house of their own

Over the past two decades even though the percentage of new house purchase loans taken out by FTB’s has continued to increase, high house prices and affordability issues have meant that there has been a big reduction in the proportion of mortgages taken out by single first-time buyers.

In 2006 the proportion of loans taken out by singletons accounted for 53% of all FTB loans.  Today the figure is just 46% – highlighting the real pressures single FTBs face when trying to get a foothold on the housing ladder. With housing at its most unaffordable level for around 150 years, first time buyers are particularly impacted. Rates of home ownership amongst 25-34 year olds is currently around 41% and has collapsed since 2003 when it stood at around 59%.

According to recent data from UK Finance, the number of loans to first-time buyers fell in 2022 by around 9% to 370,200 compared to 2021 – a year which had seen the highest level of FTBs since 2006. Although the actual number of loans to FTBs fell in 2022, the proportion of loans to FTBs as a percentage of all house purchase loans increased and now stands at 54% – its highest ever level.  The continued number of FTBs entering the market reflects the overwhelming desire for people to become owner occupiers.

But it is with singletons where the figures are the most alarming. The proportion of FTB loans taken out by single applicants fell in 2022 to 45%, reversing the increase seen in 2021 when there was a temporary stamp duty holiday.  In 2006 singletons accounted for 53% of all loans to FTB, but this proportion has fallen steadily as affordability issues continue to hit. During the first five months of 2023, the proportion of FTB loans taken out by single people stood at 46%.




Number of FTBs

Proportion of FTB loans taken out by single applicant. Proportion of FTB loans taken out by joint applicants. FTBs as a percentage of all home purchase loans.
2006 400,900 53% 47% 37%
2007 357,600 51% 49% 36%
2008 191,000 50% 50% 38%
2009 193,900 53% 47% 38%
2010 193,600 55% 45% 37%
2011 188,000 54% 46% 38%
2012 211,900 53% 47% 40%
2013 258,200 51% 49% 44%
2014 310,300 49% 51% 46%
2015 298,100 46% 54% 46%
2016 328,500 45% 55% 48%
2017 345,900 45% 55% 49%
2018 353,100 45% 55% 50%
2019 351,300 45% 55% 51%
2020 304,000 45% 55% 50%
2021 405,400 47% 53% 49%
2022 370,200 45% 55% 53%
2023 – May Year to date 107,000 46% 54% 54%

(Source UK Finance)

Should we be concerned about the reduction in the number of single first-time buyers entering the housing market?

Yes. We all know that first time buyers are crucial to the health of the housing market and without them the housing market would grind to a halt. We also know that the dream of owning your own home remains as strong as ever.

However, over the last 50 years, due to a combination of an ageing population, an increase in the number of divorces, plus more people choosing to live alone there has been a change in household composition – particularly amongst single person households which has doubled. The changes in the makeup of UK households have increased the demand for properties from singletons who have suffered as the lack of housing supply has pushed up house prices to levels never seen before.

But there is some light at the end of the housing tunnel for first time buyers, particularly through the Shared Ownership scheme which allows borrowers to buy a share in the overall value of a home and pay a rent on the rest of it.  The scheme is specifically aimed at helping first time buyers get on the housing ladder.

Shared ownership has very quickly become the tenure of choice for many FTBs as in 2021/22 over three quarters of private registered provider shared ownership sales were to FTBs. Shared ownership can also help younger people become homeowners earlier with the average age of a shared ownership FTB being 31 years old compared to 34 years for FTBs in general.

But shared ownership is especially important for singletons as it provides them with a much better chance to get on to the housing ladder.  In 2021-22, around 56% of shared ownership purchases were made by one adult households, versus just 29% for FTB households in general.

Leeds Building Society is the largest shared ownership lender in the UK, and we know that the deposit requirements for shared ownership properties are typically lower than ‘normal’ properties, meaning that shared ownership can also facilitate home ownership by shortening the period someone needs to save up for their deposit.  The average deposit required for a shared ownership mortgage in 2021-22 was £20,800, compared to £43,693 on average for FTBs.

But as we approach the annual National Shared Ownership Week in September, it’s worth highlighting that singletons still face huge pressures in getting on the housing ladder due to insufficient new build houses being built.

Across England there were 210,070 new build properties built in 2021-22 of which only around 28% were classed as affordable homes. There were 19,386 new shared ownership properties delivered in 2021-22, of which 92% were new builds (the remainder being acquisitions) meaning that shared ownership properties accounted for just 30% of the new build total – a figure which is way too low.

It’s estimated that over the next 15 years the UK will require 5 million new homes – an average of 340,000 new homes each year.  This is greater than the Government’s current 300,000 ‘target’ which has not been achieved since 1971. The average number of new homes delivered each year over the last decade has been less than half of this figure.

Achieving these targets will be difficult, and it will take all parts of the market to deliver this level of housebuilding, from private developers to housing associations and local government.

But the longer-term aim for the next government, whoever that might be, should be to address the drastic shortage in housing.

The issues facing homeownership are deep-rooted and wide-ranging but building enough homes to meet demand is the right place to start and would start to deliver on the homeownership aspirations of millions of people.

Written by Martese Carton, Director of Mortgage Distribution, Leeds Building Society.

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