The number of first-time home buyers fell 22 per cent between January and August of this year compared to the same period in 2022, according to Halifax.
The figures reflect a broader slowdown in the housing market, driven largely by higher inflation and mortgage rates.
But while paying a mortgage has become more expensive, Halifax said purchasing the property itself has become slightly more affordable for first-time buyers.
Drop: This graph shows the number of first-time property buyers in the January-August period of each year, from 2013 to 2023.
The house price-to-income ratio for first-time buyers has fallen from 5.8 in June last year to 5.1 currently, the bank said, meaning house prices for those moving up the real estate ladder are at their most affordable level since June 2020.
This was largely due to wage increases rather than falls in house prices, the mortgage lender said, although some indices suggest prices are falling.
Halifax’s own index showed a 4.6 per cent drop in house prices in the year to August.
The average first-time buyer now makes a deposit of £54,116 and buys a house worth £288,030.
The typical age of a first-time buyer in the UK is now 32 years old, and the average age is 30 years or older in each of the UK regions.
According to a Halifax report released last month, the home price-to-income ratio for all buyers was 6.7, up from 7.3 a year earlier.
The number of first-time buyers is lower because they usually buy cheaper properties.
However, the price-to-income ratio arguably affects them more, as they have no equity from an existing property to use towards their home purchase and rely solely on their savings.
Price relative to income: Wage increases mean buying a home could be a little more affordable for first-time buyers, but they will have to deal with higher mortgage rates (File image)
The number of buyers falls throughout the market
The figures, which are based on mortgages agreed with Halifax, suggest the number of buyers is falling across the property market.
As a proportion, first-time buyers actually accounted for slightly more of the mortgages agreed in the first eight months of 2023 (53 percent) than in 2022 (52 percent).
In 2022 as a whole, the number of first-time buyers fell by 11 per cent, but this followed a giant jump of 59 per cent in 2021, as buyers took advantage of savings made during the pandemic and the stamp duty holiday to move forward. the staircase of the house.
Kim Kinnaird, director of Halifax Mortgages, said: “The growth in house prices over the last decade means getting an adequate deposit remains a major hurdle.”
‘Then you have to find the right property in a property market with limited supply, coupled with the sharp rise in interest rates more recently, meaning there is a lot to consider for any first-time buyer.
“The expected further decline in house prices this year – coupled with stronger income growth – may offset higher interest rates to some extent, which will be good news for many.”
How much do first-time buyers pay?
The average deposit required is now £54,116, according to Halifax.
Data from Halifax shows first-time buyers are now paying an average of £288,030 for their homes, down 2 per cent in the 12 months to August 2023. This is in line with broader falls in house prices .
The average deposit placed on a first home is now £54,116, around 19 per cent of the property price (in 2013, the average deposit was £31,060, around 21 per cent of the property purchase price at that time). moment).
First-time buyers in London make the largest deposit (averaging £113,078), while those in the North East make the smallest amount, averaging £29,184.
Cheapest locations for first-time buyers
The UK’s most expensive regions saw some of the biggest falls in the number of people getting onto the property ladder.
The South East, which has the second most expensive average house price in the UK, saw a 25 per cent drop between January and August this year, although the number of first-time buyers was still much higher in the region (16 per cent ). , which 10 years ago.
London and East Anglia had the second biggest declines in first-time buyers entering the property market so far this year at 24 per cent.
Starting price? The most expensive locations, such as the south-east of England and London, have seen the biggest falls in the number of first-time buyers in the last year.
Scotland, home to nine of the UK’s 10 most affordable places to buy a first home, had the smallest drop in first-time buyers, at 14 per cent.
London was the only region to see a decline (9 per cent) in the number of people entering the property market for the first time compared to 2013.
Inverclyde, in the west of Scotland, is the most affordable area to get your foot on the property ladder.
Based on average incomes of £39,485 in the area, compared to the average home price for first-time buyers of £112,112, first-home buyers in Inverclyde need to borrow or save just under three times the average salary.
The least affordable area in the country is Newham, east London, where first-time buyers face a median property price of £448,435, almost 11 times the median annual income in that area.
A window of opportunity for first-time buyers?
Although its numbers are falling, mortgage experts have said current market conditions could present a window of opportunity for first-time buyers who can afford it to move up the ladder.
This is because there is less competition from other buyers, which puts them in a strong negotiating position.
Mortgage rates are slowly falling, some now below 5 percent, which could soon bring other buyers back into the market.
If first-time buyers can get ahead, some mortgage brokers say they can save.
David Walsh, director at London brokerage Kite Mortgages, said: “The UK property market is hugely driven by sentiment and, with the narrative around interest rates changing dramatically over the last week, there is likely to be every More and more buyers are returning to the market.
‘More buyers equals more competition, which can mean higher prices. With this in mind, I think now is a good time for first-time buyers. Of course, the problem you may encounter, like all buyers, is the lack of [available homes].’
Elliott Benson, mortgage broker at Leeds-based Sett Mortgages, added that first-time buyers could also benefit from a greater number of homeowners deciding to sell their properties at this time, due to higher mortgage rates and the prospect of higher regulation.
“With owners selling, it is starting to be a favorable time to buy, especially now that property offers are returning to normal rather than £50,000 above the asking price,” he said.
“Instead, we’re getting back to a real negotiation, rather than a crazy bidding war for every house, and that will favor first-time buyers.”
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