Halifax: First-time buyer sales fall amid market slowdown

The number of first-time buyers has fallen this year but the proportion of sales to this cohort remains the same due to the slower market, research suggests.

Halifax’s latest First-Time Buyer Review showed the number of first-time buyers fell 22% between January and August this year, compared to the same period in 2022.

But they still accounted for more than half of all home loans agreed in the first eight months of this year, a similar proportion as during the same period in 2022 as activity in the wider housing market slowed. 

The lender said various challenges in the housing market, including increases to mortgage rates and periods of lower availability of mortgage deals - will have impacted many first-time buyers in recent months.

The research also showed the average price of a first home is now £288,030 – down just 2% in the past year, while deposits are down 12%, although still averaging £54,116.
Scotland is the UK’s most affordable place for first-time buyers to get on the property ladder, hosting nine of the top 10 cheapest areas.

Kim Kinnaird, director of Halifax Mortgages, said: “The average age of those buying their first property is now 32, rising by two years over the past decade, most likely reflecting that increasing costs are making the road to home ownership longer. Also, when people are ready to buy a home, most are doing so in joint names which helps both in terms of costs and affordability.

“The expected further fall in house prices this year - alongside stronger income growth - may somewhat offset higher interest rates, which will be welcome news to many. Further, there are some areas which continue to be great options for first-time buyers – the average cost of a first property in Scotland, as an example, comes in at almost £100,000 less than the UK average.”

Commenting on the report, Chris Druce, senior research analyst at Knight Frank, said: “With interest rates at a 15-year high, affordability is proving to be a significant drag on activity in the UK residential market. First time buyers, who are typically unable to access the best mortgage rates when starting out, are particularly exposed to this.

“While we expect average prices to decline by 10% through this year and next as the market continues to cool after a pandemic inspired boom, the challenge of getting onto the property ladder will remain significant.

“With the political party conference season underway, fresh polices to support first-time buyers are needed.

“This is because existing measures – such as the doubling of the nil-rate stamp duty threshold – are helpful but time-limited. A replacement for the expired Help to Buy scheme, which at its peak supported 50,000 new build sales annually in England, would prove popular, too.”