"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."
Almost two thirds (63%) of mortgage completions are now in joint names, according to new research from Halifax.
The rise in joint applications comes as the number of first-time buyers fell by 11%, to 362,461, in 2022 compared to the year prior.
However, first-time buyer levels remained higher than pre-pandemic, with the number getting on the housing ladder in 2022 higher than any previous year, other than in 2006 and 2021’s record spike. In 2021, the ‘race for space’, pent up demand from the pandemic and government measures to ease stamp duty costs, led to a record number of first-time buyers getting the keys to their first home.
The number of first-time buyers fell across all nations and regions last year, compared to the record highs seen in 2021.
The greatest falls last year were in the South East, South West, Wales and Northern Ireland, all dropping by 12%, an expected decline considering the very high demand seen in these areas in 2021.
East Midlands saw the smallest fall, relative to the rest of the UK, with the number of first-time buyers down 7%.
In 2022, the average cost of a home for a first-time buyer was up 13% (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 – up 8% on 2021. Despite these significant sums, first-time buyers now account for over half (52%) of all loans on homes – the highest in the last decade.
Affordability
Average property values for first-time buyers are now around 7.6 times the average UK salary, so it’s no surprise that new buyers are increasingly applying for mortgages in joint names rather than by themselves.
The most affordable area for first-time buyers in the UK is West Dunbartonshire. Using the comparison of 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 roughly 2.7 times the average salary.
The least affordable areas in the country are in London. First-time buyers face average house prices of 10 times the average salary if they want to buy in Westminster or Camden.
Kim Kinnaird, director of mortgages at Halifax, said: “Over 362,000 people got on the property ladder in 2022, with first-time buyers now accounting for over half of all home loans. 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.
“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.
“The length of time needed, and cost of, raising a deposit are likely having an impact on the profile of the average first-time buyer over time. Today, those starting out on the housing ladder are 32 years old, on average - two years older than a decade ago – and almost two thirds of people are now getting their first mortgage in joint names.”
