How much do first-time buyers pay compared to existing homeowners?

The average price paid by first-time homebuyers in the UK has increased at the same level as those already on the property ladder over the last year, with the cost of a first home also sitting at around 70% of the average price paid by those climbing the second rung and beyond.

Stipendium analysed house price data and its research showed that the average first-time buyer currently pays £234,468 in order to get a foot on the property ladder, with this cost increasing by 12% over the last year.

At the same time, the average price paid by existing homeowners has increased by 13% in the last year, meaning first-time buyers have seen the cost of homeownership climb at the same rate as those in a significantly stronger position in the market. This means that the average first-time buyer house price now sits at 71% of the price paid by existing homeowners. However, in some areas of the market, they are paying a similar level in order to secure their first home.

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Indeed, Stipendium noted that in the City of London, the average first-time buyer is actually paying 4% more than those already on the ladder. In Tower Hamlets and Newham, the average price paid by a first-time buyer equates to 95% of the average price paid by existing homeowners, with Waltham Forest (89%), Hackney (89%), Islington (88%) and Barking and Dagenham also home to some of the highest house prices paid by first-time buyers when compared to the rest of the market.

But it’s not just the capital - Blaenau Gwent (87%), Hull (85%), and Stoke-on-Trent (84%) are also home to some of the highest house price hurdles for first-time buyers when compared to wider market values.

Despite ranking as one of the most expensive areas outside of London, Elmbridge is actually home to the best level of relative first-time buyer affordability versus the wider market. The average first-time buyer house price of £452,057 comes in at just 56% of the wider price paid by existing homeowners (£802,880).

“The task of securing that first foot on the ladder remains unsurpassable for many and it’s easy to see why,” Christina Melling, chief executive at Stipendium, said.

“Not only has the average price paid by a first-time buyer kept pace with the wider market during a period of unprecedented house price growth, but the cost of a first home remains extremely high and is some 70% of the price paid by second and third rung buyers.”

Melling stressed that this puts first-time buyers “at a significant disadvantage as they don’t have the financial foundation of an existing home to sell.”