Halifax report also shows flats gaining popularity as starter homes
Nearly two thirds, or 63%, of first-time buyer mortgage completions are in joint names, indicating a growing trend among aspiring homeowners to team up to step on to the housing ladder.
The latest analysis from Halifax shows a surge in joint applications, coinciding with rising deposit requirements over the past decade.
Last year, first-time buyers shelled out an average deposit of £53,414, a substantial increase of £21,000 compared to 10 years ago, marking a 67% rise. Despite a 30% increase in the average salary over the same period, the challenge of amassing a deposit equivalent to more than a year’s average pay persists.
While first-time buyers constituted the majority, or 53%, of all home loans in the past year, the overall number saw a decline of 21% to 293,339, compared to 2022. The average house price for buyers entering the housing market was £288,136, reflecting a 5% decrease from the previous year. However, this price remains substantially higher, averaging over £132,000, or 86% more than a decade ago.
Flats have gained popularity as starter homes, increasing by six percentage points compared to 10 years ago. The shift, Halifax said, suggests that flats may present a more accessible and relatively affordable option for new buyers, with the number of first-time buyers choosing terraced homes decreasing by seven percentage points over the same period.
Meanwhile, the average age of a first-time buyer has surpassed 30 years in all regions, reaching a UK-wide average of 32 years old.
“Following a record year in 2021, unsurprisingly in view of the wider economic environment, the number of first-time buyers joining the property market fell again in 2023 to around 293,000,” Kim Kinnaird (pictured), director at Halifax Mortgages, said. “Despite this drop, new buyers made up over half of all home loans. However, to get a foot on the ladder most people are now buying for the first time in joint names.
“There are a number of schemes available to support first-time buyers, like the mortgage guarantee scheme, which allows us to offer up to 95% mortgages to first-time buyers and has been extended until June 2025. Alternatively, the First Homes scheme offers discounts on new-build homes to first-time buyers, while shared ownership options allow new buyers to purchase some of the property and rent the rest.
“The overall fall 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 steady supply of properties in their price range, while they are faced with the continued pressure of saving for a deposit, when rent and living costs are high.”
Amanda Bryden, head of mortgage intermediaries at Halifax, also noted that first-time buyers often find their way into homeownership difficult.
“As a result, they are continuing to seek advice earlier in the homebuying process,” she added. “Brokers are perfectly placed to educate and support people by providing guidance on local markets and sharing insights on the homebuying journey, so people can make the dream of owning their first home a reality.”
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