First-time buyers in UK drop by a fifth as higher mortgage costs bite

The number of first-time buyers in the UK has fallen by more than a fifth, while homes in need of renovation are most in demand as buyers look for cheaper properties, in the latest evidence that people are struggling with higher mortgage costs.

There were 22% fewer first-time buyers between January and August compared with the same period last year, according to the mortgage lender Halifax. They still accounted for more than half (53%) of all home loans agreed in the first eight months of this year, similar to a year earlier (52%).

Kim Kinnaird, director of Halifax Mortgages, said the average age of those buying their first property had risen by two years over the past decade to 32.

A separate report from Rightmove, looking at more than 600,000 available properties on the property website, revealed that “fixer uppers” are the most in demand among buyers, and are 8%, or £29,000, cheaper than the average property up for sale.

On the flip side, those looking for a newly refurbished home are paying a premium of 19%, or almost £70,000.

After renovation projects, homes with new boilers, double glazing, loft conversions and storage space attract the most attention, along with chain-free homes and those with a garden and near stations. For renters, double glazing, smart technology, and being near a station are the top three features that attract the most demand.

The Bank of England raised interest rates 14 times since the end of 2021 to 5.25% – in an attempt top bring high inflation under control – before pausing last week, raising hopes that the peak in borrowing costs has been reached.

As mortgage costs have risen, the south-east, which has the second most expensive average property prices in the UK, had the biggest decline in the number of people buying their first home so far this year, down 25%. It was followed by London and East Anglia, down 24%, Halifax said.

However, strong income growth in recent months means the house price to income ratio for first-time buyers has fallen from 5.8 in June last year to 5.1, meaning prices for those getting on the housing ladder are at their most affordable since June 2020.

The average deposit put down on a first home is now £54,116 – 19% of the property price. This compares with £31,060 in 2013, 21% of the property purchase price then.

First-time buyers in London need to stump up the biggest deposit, an average of £113,078, while those in the north-east are putting down the lowest amount, an average of £29,184.

“Getting the keys to your first home is a significant milestone in anyone’s life,” Kinnaird said. “The expected further fall in house prices this year – alongside stronger income growth – may somewhat offset higher interest rates, which will be welcome news to many.

“Further, there are some areas which continue to be great options for first-time buyers – the average cost of a first property in Scotland, as an example, comes in at £100,000 less than the UK average.” It is £187,215 compared with the UK average of £293,464.


This website uses cookies. By continuing to use this site, you accept our use of cookies.