Halifax

First-time buyers make up biggest part of property market for first time in 23 years

23 February 2019

  • Number of first-time buyers increases for the seventh consecutive year

  • Average price of first home up from £153,030 to £212,473 in last decade

  • Most expensive average first-time buyer properties in Brent (£500,088)

The number of first-time buyers reached 372,000 in 2018, accounting for the majority of home purchases for the first time since 1995, according to the latest Halifax First-Time Buyer Review.

The number of first-time buyers has gone up 2% in the last 12 months, continuing an upward trend over the last seven years. Although growth in 2018 was at a slower rate than 2017 (7.6%) and 2016 (9%), first-time buyers overall have increased by 92% from an all-time low of 192,300 in 2008. (See Table 1)

First-time buyers now account for just over 50% of all house purchases with a mortgage, an increase from 38% a decade ago. Halifax data revealed that the average price paid for a typical first home has gone up by 39%, from £153,030 in 2008, to £212,473 in 2018, and the average deposit has increased by 57% from £21,133 to £33,252 over the same period¹. 

The average deposit put down by a first-time buyer was 14% of the purchase price in 2008 (£21,366), jumping dramatically to 20% in 2009 – the highest over the last decade. In 2018 the average deposit has come down to 15% of the purchase price, although the average property price has continued to increase. UK first-time buyers are putting down an average deposit of £32,841, with those in London stumping up an eye-watering £110,656, while those in Wales are paying the lowest average deposit of £16,449.

Terraced houses, closely followed by semi-detached properties have continued to be the first-time buyer’s home of choice over the past decade, making up two-thirds (67%) of mortgages for first homes in 2018.

The average age of a first-time buyer in 2018 has remained at 31 – two years older than a decade ago. In London it has grown from 31 to 33 since 2008 – the oldest in the UK. The biggest increase in age was in Northern Ireland, up by three years from 28 to 31.

Russell Galley, Managing Director, Halifax, said: “New buyers coming on to the ladder are vital for the overall wellbeing of the UK housing market, and the continued growth in first-time buyers shows healthy movement in this important area – despite a shortage of homes and the ongoing challenge of raising a deposit.

“Last year was the first year that first-time buyers accounted for the majority of the market since 1995, which shows that the factors reducing some of the associated costs – such as continued low mortgage rates and Stamp Duty – are supporting the increasing number of people taking their first step on to the property ladder.”

Regional snakes and ladders

While the numbers of first-time buyers have increased nationally, the number of first-time buyers in Scotland and Wales has fallen over the last year. (See Table 2)

London and the South East have seen the fastest rise in average price paid and deposit put down by first-time buyers over the last five years. However, the average price paid in London grew only by 1.4% and the deposit fell by 1.4% over the last 12 months. This is in contrast to the 50% growth in first-time buyer prices in London in the five years to 2018, compared to growth of 36% nationally.

The highest rise in house prices for first-time buyers is in Northern Ireland, up 7.5% in the last 12 months, although prices paid in Northern Ireland are still 16% lower than in 2008, and the number of first-time buyers in the region has more than tripled over that time. 

Deposits grew fastest over the last year in the East and West Midlands, the South West and East Anglia, reflecting the continued increase in prices for first-time buyer properties. (See Table 3)

Meanwhile average deposits in Scotland, Wales and the northern regions in England fell by between 2% and 9%, driven by a decrease in the average deposit as a percentage of the purchase price, combined with slower house price growth.

First-time buyer affordabilityThe top 10 most affordable local authority districts (LADs) in the UK are all in the North West and Scotland. The most affordable are Pendle in Lancashire, Copeland in Cumbria with an average property price of £88,852 (Pendle) and £110,930 (Copeland), 2.6 times the local average gross annual earnings. The most affordable local authority district in Scotland is East Ayrshire with an average property price of £94,376 – three times the average gross annual earnings. (See Table 4)

Of the 10 least affordable LADs, nine are in London. The least affordable is Brent where the average first-time buyer property price of £500,088 is 13.3 times the gross average annual earnings for that area.

Oxford has joined the top 10 list since 2017 where the average first-time buyer property price is £400,730 – 10.9 times the gross average annual earnings for that area. (See Table 5)

ENDS

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