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First-time buyer profile shifts as prices rise

Young couple looking at an estate agent's window display

Rising house prices and the size of deposit required for a mortgage mean that the average age of first-time buyers is now over 30 in all nations and regions of the UK.

On average, first-time buyers are now 32 years old -- and more than six in 10 apply for a joint mortgage in order to get on the housing ladder.

The analysis from mortgage lender Halifax shows that almost two thirds (63%) of first-time buyer mortgages completed in 2022 were in joint names (two or more people), leaving 37% as sole applications.

With average property values for first-time buyers now around 7.6 times the average UK salary, it's no surprise that new buyers are increasingly applying for mortgages in joint names rather than by themselves, Halifax said.

The most affordable area for first-time buyers in the UK is West Dunbartonshire in Scotland, according to the report. Comparing the average earnings in West Dunbartonshire (£37,910) to the average first-time buyer house price in the area (£103,957), those getting started on the property ladder need to borrow around 2.7 times the average salary.

It's a very different story for people looking to buy in London. Of the 10 local authority districts in the UK rated as least affordable for first-time buyers in 2022, eight are in the UK capital and first-time buyers face average house prices of as much as 10 times the average salary if they want to buy in Westminster or Camden.

Across the country, the average cost of a home for a first-time buyer rose 13% last year to £302,010, with average deposits now 21% of purchase price. In cash terms, this means an average £62,470 deposit is being raised by those buying their first home -- an 8% increase on 2021.

"Today, getting your own place for the first time will likely mean paying over £300,000 for that new home, and putting down, on average, a £62,000 deposit," said Kim Kinnaird, mortgages director at Halifax.

"The overall level of first-time buyers remains high, with the total number securing a home in 2022 higher than in any year other than 2021 -- where we saw record demand -- and prior to that, the peak seen in 2006. Buyers looking to make their first step onto the property ladder may welcome the forecasted fall in house prices this year -- providing the supply is there. Nonetheless, the cost of purchasing a home is still significant and saving for a deposit can be challenging for some first-time buyers."

Property website Rightmove has said it anticipates a 2% drop in house prices in 2023 "after two and a half exceptional years". Building society Nationwide predicts a decrease of around 5%, while ratings agency S&P expects UK house prices to fall by 3.5% this year.

Posted by Fidelius on January 30th 2023

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