Kate Davies, executive director of the IMLA, on first time buyer blues and green dreams
The average age of first-time buyers in the UK is approximately 33 years old – but even then, when a person is well into their career and may have started a family, getting a mortgage is no mean feat – especially with the current lack of housing crisis, affordability concerns and rising rates.
Kate Davies (pictured), executive director of the IMLA, doesn’t mince words when discussing the housing market's persistent challenges, particularly for first-time buyers and the new build sector. Her insights reveal a market caught between changing demographics, outdated policies, and the pressures of affordability.
Changing face of starter homes
“There was some disappointment that the budget didn’t announce any kind of replacement for Help to Buy,” she explained. “A lot of people felt that it encouraged builders to build properties that were larger than necessary for first-time buyers. The result was a significant departure from the traditional notion of ‘starter homes’. Those two up, two down homes – or even flats. No, increasingly, Help to Buy builders built three or four bedroom homes. People were able to leapfrog buying that first, cheaper starter home and go straight to the next home. And that became a bit of a self-fulfilling prophecy - because if you're doing that and you're borrowing a bit more, you're probably a bit older, you may have started a family and you need a bigger place to start with.”
And the consequences are now deeply entrenched in the market. As of May 31, 2023, the Help to Buy: Equity Loan scheme facilitated 361,075 property purchases in England since its inception in April 2013, according to GOV.UK. The majority of these purchases were by first-time buyers, accounting for approximately 82% of total completions.
“If you’re a builder, it makes more sense to build a bigger property because you’re going to get more money for it,” Davies said. “That becomes a slight conundrum, because the first time buyer profile seems to have changed, so how do you cater for that?”
‘Buying in London is always going to be painful’
This economic logic leaves younger buyers struggling to find entry-level homes, especially in metropolitan areas like London, where prices remain perpetually out of reach. According to Finder, the average house price for first-time buyers in London was approximately £492,234, significantly higher than the national average of £288,136. And, in terms of deposits, first-time buyers in London faced an average deposit requirement of £108,850 - which is more than double the national average deposit of £52,414.
“Buying in London is always going to be painful,” Davies admitted, but emphasised the stark differences in affordability across regions. The UK is far from unique in this respect: “Look at most capital cities, and I think you’re going to get the same answer,” she warned.
“Property expert Kate Faulkner would say she gets quite annoyed when she’s told that the average first-time deposit is £66,000. She lives in Nottingham, where you can buy a whole property for less than £66,000. There are large regional discrepancies which are often not reflected in the more dramatic headlines.”
The government’s target of 1.5 million new homes underscores the scale of the problem, with a goal of constructing approximately 370,000 homes annually. Despite this, the Financial Times reported that, in the past year, completions fell by 13% to 183,610. Davies is equally candid about the practical barriers.
‘Deposit unlock’
“Yes, we need to build more, but where?” she asked, pointing to the heated debates around Green Belt land and local resistance to large-scale developments. Instead, she advocates for a combination of small-scale, localised projects and large developments that require careful planning.
“You need the infrastructure,” she said, listing essentials like hospitals, transport links, and schools. Without these, large developments risk overwhelming local resources.”
The financial side of the housing market is evolving as well, with innovative solutions stepping in to fill the void left by Help to Buy.
“There are market solutions like Deposit Unlock, and Yorkshire Building Society has introduced its 5% deposit product,” Davies noted. She also hinted at other schemes in development, which remain under wraps. However, these solutions still face the uphill battle of addressing the ever-widening gap between deposit requirements and earnings.
Davies is particularly vocal about the need for sustainable building practices – as are many brokers now. Research from PBC Today, a 2024 report by the Royal Institution of Chartered Surveyors (RICS), indicates that commitment to green building practices has been lacking over the past 12 months, with the World Green Building Trends 2018 Smart Market Report adding that almost 40% of UK firms identified affordability as the greatest challenge in adopting sustainable construction practices - nearly 50% expecting green buildings to incur higher initial costs.
“We’re still building houses that aren’t particularly energy efficient, which I think is criminally stupid,” Davies said. “There are some signs that new buyers are keen to go for something which is energy efficient because they think it’s going to be cheaper to run.”
As Davies sees it, there is no single solution to the housing crisis. The interplay between affordability, availability, and sustainability requires a multifaceted approach, blending government intervention, private innovation, and community planning.
“There are many challenges [ahead],” she added.
