Cost for first-time buyers increases by two thirds in a decade

03 September 2020

  • North Ayrshire in Scotland most affordable area in the UK for first-time buyers
  • Average age when buying first property is now 31
  • Total number of first-time buyers at seven year low

Property prices for first-time buyers have increased 69% in the past decade, with the average price rising from £142,473 in 2010, to £241,025 today, according to the latest Halifax data.

In London, the average first-time buyer property has nearly doubled in price (up 98%) to £463,536, with prices in the South East increasing by 73% to £303,838, and the East Midlands up 68% to £187,525. This compares to an average 60% rise for all buyer types.

When comparing this year to 2019, first-time buyer properties have seen a 7% rise, with Wales experiencing the highest rise at 9%, closely followed by the North East, and Yorkshire and the Humber, both up 8% to £140,114 and £161,933 respectively. Properties in London and the South East have seen the smallest annual increase of 3%.

First-time buyer numbers fall

The number of first-time buyers has fallen by almost a third (29%), since last year. In the first six months of 2020 there were 116,843 first-time buyers, compared to 164,800, over the same period in 2019.

The fall comes despite first-time buyers making up over half (52%) of the property market, up from 38% in 2009. The share has steadily risen since the introduction of Help to Buy in 2013, which has helped over 270,000 buyers take their first step on to the housing ladder.

Tom Martin, Mortgages Director at Halifax, said: Whilst the number of first-time buyers suffered a sharp fall during lockdown, numbers are beginning to increase as we approach the autumn, with purchases that were paused beginning to move again, and buyers making the most of the Government’s Stamp Duty changes. With first-time buyers in London paying almost double what they were a decade ago, yet many regions in Scotland remaining affordable, the challenges facing first-time buyers are clearly significantly influenced by where in the UK they are house hunting.

Costly capital

Unsurprisingly, the most expensive first-time buyer properties are found in London, where the average home costs £463,536. This is followed by the South East, where properties cost £303,838, and East Anglia, with an average property price of £228,004. However, this means first-time buyers in every region in the UK are able to benefit from the recent Stamp Duty changes, with no land tax paid on properties purchased up to the value of £500,000, until March next year.

First-time buyers can find the cheapest homes in the North East, where the average price is £140,114, and Northern Ireland (£143,040).

Dramatic deposits

In London, the average first-time buyer deposit is more than double the national average, at £109,146. The largest deposits as a percentage of the property price can be found in London (24%), Scotland (20%), East Anglia, and the South West (both 19%).

Buyers are putting down record deposits for their first home, averaging £47,059 in 2020, which is 25% higher than the average amount put down in 2010. However, deposits as a percentage of the property value continue to fall from their peak of 27% a decade ago, to 20% today.

First-time buyers looking to get the biggest ‘bang for their buck’ could consider homes in the North East, which has the smallest average deposit, at £24,279 (17% of the property price).

Average first-time buyer now aged 31

The average age of a first-time buyer has remained consistent over the past 15 years, rising from 30, in 2005 to 31 today.

The youngest first-time buyers can be found in North East Derbyshire in the East Midlands, where the average age is 28. The oldest are in Richmond upon Thames, London, where the average age is 36.

Cost-effective Caledonia

Areas are considered ‘affordable’ when property prices are no more than four times local earnings. The most affordable area for a first-time buyer can be found in North Ayrshire, Scotland, where the average property is 3.2 times average local earnings. In fact, half of all the most affordable areas can be found in Scotland, with Barrow-in-Furness and Pendle in the North West also featuring (both 3.4 times local earnings).

Nine of the 10 least affordable areas can be found in London, with Brent, where average first-time buyer properties cost 12.3 times the average income, the UK’s least affordable area. Oxford also makes the list with properties costing 11.6 times the average local salary.

Over the past decade, the number of affordable local authority areas for first-time buyers has reduced from 120 to just 20. Hackney has seen the greatest decrease in affordability since 2010, with house prices rising from 7.0, to 12.2 times average local earnings. This is closely followed by Lambeth, where prices have risen from 6.2, to 11.4 times the average salary.

Middlesbrough has seen the greatest increase in affordability, with house prices falling from 4.4, to 3.9 times the average local income. Wyre, North West, has also become more affordable, with properties reducing from 4.5 to 4.3 times average local earnings.