According to Halifax, the number of first-time buyers on the housing market fell by 22 per cent between January and August this year compared to the same period in 2022.
The figures reflect a broader slowdown in the housing market, largely driven by higher inflation and mortgage rates.
But while paying a mortgage has become more expensive, Halifax said buying the property itself had become slightly more affordable for first-time buyers.
Drop-off: This graph shows the number of first-time buyers on the housing market in the period January-August of each year, from 2013 to 2023
The house price/income ratio for first-time buyers has fallen from 5.8 in June last year to 5.1 currently, the bank said. This means that home prices for those entering the housing market are at their most affordable since June 2020.
This was largely due to wage increases rather than falls in house prices, the mortgage lender said, although some indexes suggest prices are falling.
Halifax’s own index showed a 4.6 per cent fall in house prices in the year to August.
The average first-time buyer now pays a down payment of €54,116 and buys a house worth €288,030.
The typical age of a starter in Britain is now 32, and the average age is now 30 or over across all UK regions.
According to a Halifax report published last month, the home price-to-earnings ratio for all buyers was 6.7, up from 7.3 a year earlier.
The number of starters is lower because they usually buy cheaper properties.
However, the price-to-income ratio is likely to affect them more because they have no equity in an existing property to use to purchase a home and rely solely on their savings.
Price/income: Wage increases mean that buying a house may be slightly more affordable for first-time buyers, but they will face higher mortgage rates
The number of buyers on the market is decreasing
The figures, which are based on mortgages agreed with Halifax, suggest the number of buyers in the housing market is falling.
In proportion, first-time buyers even accounted for slightly more of the mortgages taken out in the first eight months of 2023 (53 percent) than in 2022 (52 percent).
In 2022 as a whole, first-time buyers fell by 11 per cent – but this followed a massive 59 per cent jump in 2021, as buyers took advantage of the savings made during the pandemic and stamp duty holiday to get ahead. the housing ladder.
Kim Kinnaird, director at Halifax Mortgages, said: ‘The growth in house prices over the past decade means that securing a suitable deposit remains a significant hurdle.
‘Then there’s finding the right home in a housing market with limited supply, coupled with the more recent sharp rise in interest rates, meaning there’s a lot to consider for any first-time buyer.
‘The expected further decline in house prices this year – in addition to stronger income growth – may offset higher interest rates to some extent, which will be welcome news for many.’
How much do starters pay?
According to Halifax, the average deposit required is now £54,116.
Halifax data shows first-time buyers are now paying an average of £288,030 for their home, down 2 per cent in the 12 months to August 2023. This is in line with the wider decline in house prices.
The average deposit for 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 the time).
First-time buyers in London make the largest deposit (average £113,078), while first-time buyers in the North East put down the lowest amount, on average £29,184.
Cheapest locations for starters
Britain’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 Britain’s second most expensive average property prices – saw a 25 per cent fall between January and August this year, although the number of first-time buyers in the region was still much higher (16 per cent). , than 10 years ago.
London and East Anglia saw the second biggest drop in the number of first-time buyers entering the property market this year, at 24 percent.
Priced out? More expensive locations such as the South East of England and London saw the biggest decline in new buyers last year
Scotland, home to nine of the ten most affordable places in Britain to buy a first home, saw the smallest drop in first-time buyers at 14 percent.
London was the only region where the number of people entering the property market for the first time fell (9 percent) compared to 2013.
Inverclyde, in the west of Scotland, is the most affordable area to get your foot on the property ladder.
Based on the area’s average income of £39,485, compared to the average first-time home price of £112,112, those buying a first home in Inverclyde will need to borrow or save just under three times the average salary.
The least affordable area of the country is Newham, East London, where first-time buyers face an average property price of £448,435 – almost 11 times the average annual income in that area.
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