Number of first-time homebuyers falls – Halifax

But the overall level of first-time buyers remains high

Number of first-time homebuyers falls – Halifax

The number of first-time homebuyers in the UK fell by 11% in 2022 compared to the year prior, according to new research from Halifax.

Data analysis by the bank showed that the total number of first-time buyers (FTBs) dropped to 362,461 last year from a record 405,320 in 2021.

Despite this decline, Halifax noted that first-time buyer levels remained higher than pre-pandemic, with the number getting on the housing ladder in 2022 higher than any previous year, except in 2006 and 2021.

It pointed out that in 2021, the ‘race for space’, pent up demand from the pandemic, and government measures to ease Stamp Duty costs, led to a record number of FTBs getting the keys to their first home.

“The overall level of first-time buyers remains high,” Kim Kinnaird, mortgages director at Halifax, commented. “Over 362,000 people got on the property ladder in 2022, with first-time buyers now accounting for over half of all home loans.”

The Halifax report also revealed that almost two thirds, or 63%, of mortgage completions are now in joint names, with two or more people as applicants.

First-time buyer numbers fall across all nations and regions

 The number of first-time buyers fell across all nations and regions last year, compared to the record highs seen in 2021.  

The largest decreases last year were in the South East, South West, Wales, and Northern Ireland, all dropping by 12%.  

East Midlands saw the smallest fall, relative to the rest of the UK, with the number of first-time buyers down 7%.

Prices and deposits are up

In 2022, the average cost of a home for a first-time buyer was up 13% to £302,010, with average deposits now 21% of the purchase price. In cash terms, this means an average £62,470 deposit is being raised by those buying their first home – up 8% on 2021.

Despite these increasing costs, FTBs now account for over half, or 52%, of all loans on homes – the highest in the last decade.

“Buyers looking to make their first step on to the property ladder may welcome the forecasted fall in house prices this year – providing the supply is there,” Kinnaird said. “Nonetheless, the cost of purchasing a home is still significant and saving for a deposit can be challenging for some first-time buyers.

“The length of time needed, and cost of, raising a deposit are likely having an impact on the profile of the average first-time buyer over time. Today, those starting out on the housing ladder are 32 years old, on average – two years older than a decade ago – and almost two-thirds of people are now getting their first mortgage in joint names.”

First-time buyer affordability plunges

The analysis from Halifax also found that average property values for first-time buyers are now around 7.6 times the average UK salary – one of the main reasons why new buyers are increasingly applying for mortgages in joint names rather than by themselves.

In mid-2022, Halifax reported that housing affordability had fallen to its lowest level on record.

Today, the most affordable area for first-time buyers in the UK is West Dunbartonshire. Using the comparison of the average earnings in West Dunbartonshire (£37,910) to the average first-time buyer house price in the area (£103,957) those getting started on the property ladder need to borrow roughly 2.7 times the average salary.

The least affordable areas in the country are in London, with first-time buyers facing average house prices of 10 times the average salary in Westminster and Camden.

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