First-time buyers are hugely important. But a climate of increasing interest rates, expensive mortgages and unpredictable property prices is making it increasingly difficult for people to make that all-important first move.
The number of first-time buyers has fallen by 22% since the beginning of 2023, according to research from Halifax. However, this fall reflects a dip in the total number of transactions, and first timers still make up about 53% of all property buyers, just as they did in 2022 – a figure that’s higher than it was a decade ago. In 2022, there were 362,461 first-time buyers in the UK, accounting for just over half of all home purchases. Compare this figure to 2012, when first timers accounted for just two fifths of transactions, and we can see a steady increase in first time buyers over the decade. And not only are there more of them, but their deposits are increasing: in 2022, the average first-time buyer was putting down a deposit of £62,470, a figure which increases to £125,378 in London.
Unsurprisingly, they are getting older too, and in 2022 the average age of a first-time buyer was 32, as compared to 30 ten years previously. Just 20 percent of first-time buyers have children, revealing a strong preference for couples to buy homes before starting families. Clearly, despite the often challenging environment, buying a home is still very high on the list of people’s priorities.
Raising a deposit can be a struggle for many would-be homeowners, and studies have shown that as many as a third of first-time buyers receive cash gifts from family towards their property purchases. In London, the average family contribution amounted to £34,270, more than double the national average of £14,220.
The years 2020 to 2022 saw a record number of new buyers enter the market, taking advantage of low interest rates and government help initiatives such as stamp duty relief. The number of people entering the property market for the first time is currently 17% higher than ten years ago. Interestingly, strong income growth in recent months, coupled with dampened house price increases, means that the house price-to-income ratio for first-time buyers has fallen from 5.8 in June 2022 to 5.1 currently. This adds up to house prices being more affordable now for first-time buyers than they have been at any time since June 2020. The market continues to show resilience thanks to a constant stream of people wanting and needing to buy homes.