The number of first-time buyers has fallen by 11% in 2022, according to Halifax, as data reveals the average buyer needs a down payment of £62,500 to access the ladder
The number of first-time buyers in the UK fell by 11% in 2022, according to new data from Halifax, with the average deposit required climbing to nearly £62,500.
A total of 362,461 buyers hit the housing ladder last year, with the year-on-year decline following a record high seen in 2021.
The average property value for first-time buyers is now around 7.6 times the average UK wage earner, Halifax said.
In 2022, the average cost of a home for a first-time buyer has risen by 13% to £302,010, with average deposits now accounting for 21% of the purchase price.
This means that on average a first-time buyer needs to raise £62,470 for a deposit in order to buy a house, 8% more than in 2021.
Nearly two-thirds of first real estate purchases are now made in condominiums
In 2021, the “race for space”, the demand accumulated during the pandemic and the stamp duty holiday, led to a record number of buyers obtaining the keys to their first accommodation.
The 2022 first buyer figure remained above pre-pandemic levels and was the highest figure since 2016.
However, data from Halifax revealed that buying a home is becoming less affordable. He said nearly two-thirds (63%) of mortgage completions are now in joint name, with two or more people.
This may be due to the affordability constraints of deposits and mortgages, which remain the biggest hurdle for first-time buyers to own their own property.
Nationwide data showed homes for first-time buyers are the least affordable since 2008, as mortgage payments eat up 39% of a buyer’s salary.
However, despite these hurdles, first-time buyers now account for more than half (52%) of all home loans – the highest in the past decade.
The number of first-time home buyers in 2022 has exceeded the numbers seen before the pandemic
The most affordable region for first-time buyers in the UK is West Dunbartonshire in Scotland, with buyers needing to borrow around 2.7 times the average wage to buy.
The least affordable neighborhoods in the country are in London. First-time buyers face average house prices of 10 times the average wage if they want to buy in Westminster or Camden.
The need to save a larger down payment means that the average age of a first-time buyer is rising. Ten years ago the typical first-time buyer in the UK was 30, but that figure has now risen to 32.
>> Looking for accommodation? The first-time buyer’s guide to getting a mortgage and climbing the homeownership ladder
For first-time buyers, the average deposit needed to access the ladder is now over £62,000
Kim Kinnaird, Director of Mortgages in Halifax, said: “More than 362,000 people moved up the homeownership ladder in 2022, with first-time buyers now accounting for more than half of all home loans.
“Buyers looking to take their first step on the property ladder can rejoice in the expected fall in house prices this year – provided the supply is there. Nonetheless, the cost of buying a home is still significant and saving for a deposit can be difficult for some first-time homebuyers.
“The length and cost of building up a down payment is likely to impact the profile of the average first-time buyer over time. Today, those starting out on the housing ladder are on average 32 years old – two years more than ten years ago – and nearly two-thirds of people now get their first mortgage in common name.
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate contract is coming to an end or because they have agreed to buy a home should explore their options as soon as possible.
This is Money’s best mortgage rate calculator, powered by L&C, that can show you deals that match your mortgage and property value.
What if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to act to get a rate.
Anyone with a fixed-rate deal ending in the next six to nine months should consider how much it would cost them to remortgage now — and consider entering into a new deal.
Most mortgage transactions allow fees to be added to the loan and they are then only charged at the time of subscription. By doing so, borrowers can secure a rate without paying costly arrangement fees.
What if I buy a house?
Those who have agreed to buy a home should also aim to get quotes as soon as possible, so they know exactly what their monthly payments will be.
Homebuyers should be wary of overstretching and prepare for the possibility of home prices falling from their current high levels, due to higher mortgage rates limiting people’s ability to borrow.
How to Compare Mortgage Costs
The best way to compare mortgage costs and find the right deal for you is to talk to a good broker.
You can use our best mortgage rate calculator to view offers that match your home’s value, mortgage size, term, and fixed rate needs.
Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the loan mortgage that’s right for you.
> Check out the best fixed rate mortgages you could apply for