Halifax: First-time buyers are teaming up as sales fall

The number of first-time buyers fell by a fifth last year but this cohort still made up the largest proportion of purchasers amid the slowing housing market.

Research by Halifax has revealed that buying a property for the first time continued to be the majority (53%) of all home loans last year. It was also the highest proportion, since 1995, of all home purchases with a mortgage. 

However, the overall number of first-time buyers fell by 21% to 293,339 last year, compared with 2022.

The analysis found that first-time buyers are joining up to step onto the housing ladder, as almost two thirds of mortgage completions were in joint names.

It comes as the average deposit hit £53,414 last year, £21,000 more than a 10 years ago.

Although the average salary is higher than it was a decade ago, now £43,257 (+30%), getting together a deposit large enough to put down on a first home means raising more than a year’s average pay, Halifax said.

The average house price for buyers entering the housing market in 2023 was £288,136, 5% lower than the previous year. However, house prices for first-time buyers remain more than £132,000 more expensive, on average, than 10 years ago.

Flats have increased in popularity as a starter home compared to a decade ago, increasing by six percentage points. However, the number of first-time buyers choosing a terraced home has dropped by seven percentage points.

The average first-time buyer is now over 30 years old in all regions and nations, with the UK average at 32 years old.

Kim Kinnaird, director at Halifax Mortgages, said: “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. 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.”

Commenting on the report,Tom Bill, head of UK residential research at Knight Frank, said: “First-time buyers have been hit especially hard by rising mortgage rates. The sub-4% deals we increasingly hear about are typically for those with equity levels of 40% or more. The Government is likely to offer first-time buyers more financial support ahead of the election this year given that housing is a key political battleground and based on the belief that homeowners are more likely to vote Conservative.”