Hope for first-time buyers as the average down payment fell 15% last year

The average deposit needed to get into the housing market fell by 15 percent last year, according to one of Britain’s largest mortgage lenders.

According to the Halifax research, this means first-time buyers paid £9,057 less upfront for their home in 2023 than the year before.

However, they still put down a typical amount £53,414, which is around 19 per cent of the average purchase price.

The new figures are based on mortgage loans from Halifax itself and those of sister banks Lloyds and Bank of Scotland.

The average cost of a home for a first-time buyer fell by 5 percent, from a peak of £302,008 in 2022 to £288,136.

This compares with the overall UK house price increase of 1.7 per cent, according to previously published figures from Halifax, or a fall of 1.8 per cent according to Nationwide.

The average cost of a home for a first-time buyer fell by 5 percent, from a peak of £302,008 in 2022 to £288,136.

This compares with the overall UK house price increase of 1.7 per cent, according to previously published figures from Halifax, or a fall of 1.8 per cent according to Nationwide.

Where is the cheapest place to buy?

The cost of a home remains high, at around 6.7 times the average UK salary of £43,257.

That average earnings figure is based on the Office for National Statistics’ annual hours and earnings survey for the second quarter of 2023, extended to October 2023, and refers to the median average for full-time employees.

It is higher than the average gross annual income for full-time employees in the period, which was £34,963.

How affordable housing is depends on where you look in Britain.

Average deposits for first-time buyers in the East Midlands have fallen the most in 2023 compared to 2022, by 16 per cent.

London and the South East both saw a 15 per cent fall, although they were still among the largest cash deposits at £108,848 and £59,075 respectively.

First-time buyers in Islington, north London, continue to face property prices of 10.6 times the average local salary of £57,548, making it the most expensive area in the country.

Meanwhile, many of the most affordable places to buy a first home are in Scotland.

Inverclyde in west-central Scotland is the most affordable, with starter homes costing just 2.6 times the local average salary of £41,598.

The total number of people on the housing ladder also fell by a fifth last year.

It’s the biggest drop since at least 2013, when Halifax started collecting the data. Even in 2020, numbers only dropped 13 percent during the pandemic.

The biggest falls were seen in East Anglia and the South East, where the number of first-time buyers fell by 24 percent in both countries. Scotland was the most resilient, although numbers still fell by 10 percent.

First-time buyers still represent 53 percent of mortgages for home purchases, up one percentage point from 2022, reflecting the fact that there was a market-wide decline in home transactions.

This was due to higher mortgage interest rates and inflation, which put pressure on family budgets.

Kim Kinnaird, director of Halifax Mortgages, said: “It is not surprising given the wider economic environment that the number of first-time buyers entering the property market fell again in 2023 to around 293,000.

‘Despite this decline, new buyers accounted for more than half of all home loans. However, to get a foot on the ladder, most people are now buying joint names for the first time.

‘The overall decline in house prices we saw in 2023 will go some way to helping people get on the ladder for the first time – but these buyers are still dependent on a stable supply of homes in their price range as they face the continued pressure to save for a deposit, while rent and living costs are high.’

Which houses do first-time buyers buy?

According to Halifax, townhomes were the most popular home type among first-time buyers last year 30 percent of all new mortgages last year were for starters.

However, this was 7 percentage points lower than ten years ago.

First-time buyers have purchased more and more apartments over the past ten years, an increase of six percentage points compared to 2013.

London has seen the biggest increase in the number of first-time buyers choosing an apartment to establish a home there, with 72 percent of purchases in 2022 compared to 59 percent in 2013.

According to Halifax’s analysis, first-time buyers are now on average 32 years old and 30 or older in all parts of Britain.

Ribble Valley in the North West has the youngest average starter at 27 years old. The oldest starters, on average 37 years old, can be found in Slough in the south-east.

Halifax also noted that more buyers were purchasing with someone else or with more than one person.

Nearly two-thirds of mortgages (63 percent) were in joint names with two or more people, the report said.

According to the latest data from the Office for National Statistics, covering the year 2022, people living alone made up 13 percent of the population and 30 percent of the total number of households.

Another 10 percent of households consisted of a single parent living with their children.