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Sharp increase in first time home buyers despite rising prices

There was good news for first-time home buyers in 2021, with numbers up by 35 per cent on the previous year.

Part of the reason was a knock-on effect caused by the stamp duty holiday in 2020, which meant more so-called ‘first rung’ homes came on the market as other buyers sought more space during lockdown and took advantage of low-cost borrowing.

According to research by the Halifax, there were more than 400,000 people buying their first home in 2021 despite the steep rise in property prices.

The average buyer used a £53,935 deposit on a first property costing £264,140.

The rise in first-time buyers came despite UK house prices rising at a faster rate in 2021 than in any calendar year since 2004, according to the Halifax.

The mortgage lender said prices increased by 9.8 per cent during 2021 – the fastest for any calendar year since a 12.5 per cent rise in 2004.

The average UK property price hit a new record high of £276,091 in December, it added.

Esther Dijkstra, mortgage director at Halifax, said: “There were a number of factors influencing home-buying decisions in 2021.

“While working from home and the ‘race for space’ was key for many, particularly movers, it’s clear that the stamp duty holiday increased the availability of first-rung homes as others moved up the ladder.”

The average age of first-time buyers rose to 32, up from 29 in 2011. Ms Dijkstra said that this rise in average age was mostly due to “the need to save a significant deposit to get on the housing ladder”.

Because of difficulties raising a deposit, the gap between the purchase price and the deposit widened in every region in the UK, Ms Dijkstra added.

Many areas still out of reach for buyers

The survey also found that only in three local authority areas in Scotland had homes are either more affordable – in Clackmannanshire and Moray – or as affordable – in East Ayrshire, since 2011. The rest of the UK has become less affordable since then.

On average, properties now cost nearly seven times the annual salary of first-time buyers. The limit for affordability is considered to be four times the average income.

For help and advice with residential property matters, please get in touch with our expert team today.

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