Halifax First-Time Buyer Review 2021
22 January 2022
- Clackmannanshire is the most affordable area for first-time buyers
- The number of first-time buyers rose to 409,370 in 2021, up 35% on 2020
- FTB average house prices rose by 3% to £264,140
- Average FTB deposits fell 6% to £53,935
- Affordability has fallen in all but three local authorities since 2011
Last year saw first-time buyer (FTB) numbers rise at a record rate (up 35%) to 409,370 despite low affordability, according to new analysis from Halifax. The average buyer in 2021 was 32 years old and put down a £53,935 deposit on a first property costing £264,140.
Rising numbers of first-time buyers
Since 2009 first-time buyer numbers have more than doubled. With an increase of over 100,000 in the last 12 months, a total of 409,370 new buyers entered the housing market in 2021, up 35% on 2020.
Despite this surge in numbers, first-time home purchasers remained at around half of all home loans.
|Number of first-time buyers||Annual % change||First-time buyers as % of all home purchase loans|
Sources: UK Finance and *Halifax estimate for 2021
Each region across the UK saw a marked rise in the number of new buyers in the market last year. The biggest increase was in London, where numbers rose 49%. The smallest, Scotland, still saw an increase by a quarter (24%). The number of first-time buyers has more than doubled over the last 10 years in every region except London (+82%).
|Region||2011||2020||2021*||10-year change||1-year change|
|Yorkshire and the Humber||15,010||25,070||32,792||118%||31%|
Sources: UK Finance and *Halifax estimate for 2021, **Region totals will not equal UK total due to rounding
Prices rose and deposits fell
As more buyers entered the market the average first-time buyer deposit fell 6% for the UK, with only Wales and Scotland noting an increase regionally. This fall in the UK average was set against a rise in the average purchase price of first homes, which meant that, overall, the gap between purchase price and deposit widened in every region.
|Region||Average House Price 2020 (£s)||Average House Price 2021 (£s)||1 Yr % change in Average Price||Average Deposit 2020 (£s)||Average Deposit 2021 (£s)||Deposit as % of purchaseprice 2021||1 Year % change in Deposit|
|East of England||297,548||303,166||2%||58,531||55,250||18%||-6%|
|Yorks & Humber||167,267||177,683||6%||33,032||31,212||18%||-6%|
The average age at which someone buys their first home has risen to 32, up from 29 in 2011 and is now over 30 in every UK region.
|Region||Average Age 2011||Average Age 2021|
|Yorkshire and The Humber||28||30|
|East of England||30||32|
Esther Dijkstra, Mortgage Director at Halifax, said: “There were a number of factors influencing home buying decisions in 2021. While working from home and the ‘race for space’ was key for many, particularly movers, it’s clear that the Stamp Duty holiday increased the availability of first-rung homes as others moved up the ladder.
“Lifestyles have changed; over time more people have chosen to go on to higher education, go travelling, or move around for work, which are all factors in the increase in first-time buyer age. However, undoubtedly, the biggest drivers are the cost of homes and the need to save a significant deposit to get on the housing ladder.
“In 2021, the increase in average house price to £264,140, combined with difficulties in raising a deposit, meant that the gap between purchase price and deposit widened in every region in the UK.”
Low affordability across the UK
The growth of house prices has outstripped that of incomes and the average price to earnings ratio for UK first-time buyers now stands at 6.9x Affordability in all but three local authorities has fallen since 2011: Clackmannanshire (-5%) and Moray (-1%) saw the gap between house prices and wages (P/E ratio) narrow slightly, while in East Ayrshire it was flat.
One local authority, Merton, saw the P/E ratio more than double (108%), meaning affordability halved, with Reigate and Banstead nearly doubling (+97%).
Local authorities with largest deterioration in FTB affordability
|Local Authority||Average price 12 months to Dec 2021 (£)||Ave earnings 2021 est (£)||P/E ratio 2021||P/E ratio 2011||Deterioration in affordability|
|Reigate and Banstead||386,719||47,929||8.1||4.1||97%|
The price of an average FTB home is now less than four times the average income, considered the limit for affordability, in just 15 local authorities (LAs) around the UK. The least affordable LA for FTBs is the London borough of Brent, where homes are 12.3x average earnings (P/E ratio), while the most affordable is Clackmannanshire in Scotland, where it is just three times. (See Appendix for regional information.)
Most and least affordable local authorities
|Local Authority||Region||P/E Ratio 2021|
|Local Authority||Region||P/E Ratio 2021|
2019 press releases