The Office for National Statistics (ONS) analysed data from the Financial Conduct Authority (FCA) and found that first-time buyer mortgage sales were relatively high in 2006 – at 377,128 – but by the 2008 global financial crisis, this figure had almost halved to 186,014.
Sales remained low, then started to pick up in 2013 and totalled 251,359 that year.
By 2021, the mortgages sold to first-time buyers reached a series high of 394,347, which the ONS said was likely due to the stamp duty holiday.
This then fell to 360,306 in 2022 and 281,509 in 2023, the lowest level since 2013.
First-time buyers made up more of the market
However, the ONS said first-time buyer mortgage sales as a proportion of all residential property sales had steadily risen since 2006.
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Between 2006 and 2008, first-time buyers made up less than a quarter of property sales, before rising to around a third in 2018.
By 2023, first-time buyers made up 38% of the market. The ONS said this was because all residential property sales declined faster than first-time buyer mortgages between 2021 and 2023, with respective falls of 39.8% and 28.6%.
London is no longer the main attraction
The ONS found that London was no longer the top location for first-time buyers in 2023, accounting for just 12.7% of sales in the English capital compared to 16.8% a decade earlier.
The South East of England had the highest share of new homeowner sales in the UK in 2023, at 13.8%.
Between 2013 and 2021, when first-time buyer mortgage sales peaked, just 10 local authorities saw declines in new homeowner purchases – eight of them in London.
The report showed that Scotland, Wales and Northern Ireland had the areas with the fastest rises in first-time buyer mortgage sales and these were typically outside of major cities.
This also matched a fall in first-time buyers purchasing in the urban areas of England and Wales.
On average, rural areas saw first-time buyer sales rise by 9.7% between 2013 and 2023, while urban areas saw a 3.7% increase on average.
In 2013, all 20 areas with the highest rates of new homeowner mortgage sales were urban, but by 2021, three of the 20 areas that saw the sales were “immediate rural”, meaning they were near a major town or city.
Priced out of cities
Toby Leek, president of NAEA Propertymark, said: “Many first-time buyers are being priced out of cities, especially throughout London, where they have grown up or have a desire to nest themselves. This is spurring on aspiring buyers to relocate to more affordable areas of the country.
“Alongside this, other factors will continue to make it increasingly difficult for those looking to step onto the property ladder for the first time moving forward. With the average age of a first-time buyer increasing to around 33.5 years old and the amount of money needed to be put down as a deposit on a home continuing to rise to around £50,000, many people may find their homeownership aspirations hard to achieve.
“To combat this, the UK Government and the devolved administrations need to implement support mechanisms to enable more people to buy their first home well into the future, as well as continue in their missions of building new homes for a growing population, as an undersupply of properties will push up house prices even further.”
Richard Donnell, executive director at Zoopla, said prospective homeowners struggled where the cost of buying was the greatest, as a larger deposit and higher income were often needed.
He added: “First-time buyers are an important buyer group accounting for a growing share of housing sales – in 2013/14, first-time buyers accounted for more than 30% of sales, with that figure increasing to 36% of annual housing sales last year. The trend in recent years has seen first-time buyers account for a larger share of sales, as existing owners have tended to move less often and use permitted development rights to extend and add value to their homes, rather than pay stamp duty and moving costs.
“Higher house prices, higher mortgage rates and the impact of mortgage regulations have compounded the problems for those buying their first home in Southern England. This has exacerbated pressures in the rental market pushing rents higher. There is a case to ease mortgage regulations and help more first-time buyers access housing and reduce the pressure on the rental market.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: First-time buyer mortgage sales fell to 10-year low in 2023 – ONS
