6 insightful figures that highlight the challenges first-time buyers are facing

What they say

The challenges of getting on the property ladder are well known. As property prices rise, young people are struggling to save the deposits they need to purchase their first home and pass affordability checks.

These six figures highlight some of the obstacles that first-time buyers need to overcome.

1. Competition is high as the number of first-time buyers has increased by 35%

Over the last two years, the property market has been characterised by high demand and low supply. That means it’s been a seller’s market.

During this time, potential buyers have found themselves in bidding wars that have driven up property prices further.

This was partly due to the temporary Stamp Duty holiday encouraging more homeowners to move. But figures also show that the number of first-time buyers has increased.

According to analysis from Halifax, in 2021 the number of first-time buyers increased by a record 35%.

So, competition and pressure has increased, which in turn, can push up property prices. If you’re competing against other potential buyers, remember to keep your budget in mind – it can be easy to get caught up in the bidding.

2. The average first-time purchasing price has reached £264,140

According to Halifax, the average amount paid by a first-time buyer increased by 3% in 2021. That means the average purchasing price is now £264,140.

Securing a mortgage to purchase a property of this price is likely to be out of reach for many first-time buyers. While there are cheaper properties available, these may not suit your needs or be local to you.

If you’re struggling to find a property in your budget, you may want to consider a shared ownership property. These schemes allow you to purchase part of a property and rent the remaining portion. You will usually have the option to buy more equity in the property in the future until you own 100% of it.

3. The average deposit put down by first-time buyers is £53,935

One of the first challenges first-time buyers face is saving a deposit. According to the Halifax data, the average amount first-time buyers are putting down has decreased slightly in the last year, but it still remains a significant £53,935.

If you’re saving to buy your first home and are aged between 18 and 40, you could consider a Lifetime ISA (LISA).

You can add up to £4,000 each tax year to a LISA, which then benefits from a 25% government bonus. You can save or invest the money held in a LISA. However, if you withdraw money from a LISA for a purpose other than buying your first home before you’re 60, you will face a 25% penalty. 

4. 56% of first-time buyers under the age of 35 receive financial support

According to a Legal & General survey, more than half of first-time buyers under 35 receive some financial support from their parents.

Dubbed the “Bank of Mum and Dad”, parents and other family members have become an essential source of support. Among the 56% of first-time buyers that received support, 71% say they would not have been likely to buy without financial help. On average they estimate they would have to delay their housing plans by four years.

5. The average first-time buyer purchase price is 6.9 times the average income

The rise in house prices has outstripped income growth.

The average property price is now 6.9 times the average income. This compares to the four times annual income that is usually considered affordable.

The ratio varies significantly around the country. However, affordability has fallen in all but three local authorities  since 2011. Just 15 local authorities have a ratio that is four times the average income.

Unsurprisingly, London is one of the most unaffordable areas. The borough of Brent has a ratio of 12.3 times income.

As a first-time buyer, it can make securing a mortgage, even after you’ve saved a sizeable deposit, difficult due to affordability checks.

As well as looking at shared ownership properties, some banks may lend you more. Understanding the affordability checks and criteria of banks can help you apply for the right mortgage for you. This is something that a mortgage broker can help you with.

6. The average first-time buyer is 32

As the challenges for first-time buyers continue, it’s not surprising that the average age is also increasing. The average age of a first-time buyer is now 32, compared to 29 in 2011.

It’s taking longer for first-time buyers to save up the deposit they need and achieve the financial security to take out a mortgage. As house prices continue to rise at a pace faster than income, the trend for older first-time buyers is likely to continue.

Do you need help buying your first home?

If you’re looking to buy your first home, we’re here to help you. We can help you find a mortgage provider that suits your needs and offer support throughout the process. Please contact us to speak to one of our team.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.