First-Time Home Buyers Decrease to Decade Low in 2023

Shifting Trends in First-Time Home Buying: A Closer Look at 2023

In 2023, the Yorkshire Building Society's analysis revealed a noteworthy shift in the landscape of first-time homebuyers. The number of individuals purchasing their first home with a mortgage hit a decade-low, reflecting a broader trend in the market. 

Despite this decline, the proportion of first-time buyers in the mortgage market grew modestly, reaching 54% of new house purchase activity. This marked an increase from 53% in 2022 and 50% two years prior, maintaining a significant lead over the 41% recorded a decade ago.

Yorkshire Building Society's analysis forecasted a decrease in the number of first-time buyers, projecting a figure of 290,000 in 2023. Although this represents a 21% drop from 2022's 370,287, it's noteworthy that the decline is less severe than the overall 30% reduction in purchaser numbers.

The data indicates that despite challenges such as higher interest rates, cost-of-living pressures, and soaring house prices, first-time buyers are resolute in their pursuit of homeownership. This determination contrasts with the 20-year high of over 400,000 first-time buyers in 2021, spurred by government incentives, evolving work patterns, and favourable borrowing conditions post-pandemic.

Skipton Building Society and Hamptons Estate Agents highlighted a significant shift in the composition of homebuyers, with first-time buyers constituting 28% in 2023—an impressive rise from 16% in 2015. This surge demonstrates their resilience amid challenging economic conditions.

Ready to Compromise

Skipton Building Society’s analysis delved into the mindset of those planning a property purchase. Seven in 10 expressed a willingness to compromise in their quest for homeownership. Factors like garden size, location, and bedroom count took precedence in these decisions.

Among those open to compromise, 42% were content with a smaller garden, while 37% were willing to live further away from their ideal location. Despite downsizing expectations, with 67% anticipating a smaller first home, nearly half (47%) were considering overbidding to enhance their chances of securing the right property.

A survey conducted by OnePoll revealed that 34% of first-time buyers expected to own a semi-detached property, followed by flats (25%) and terraced houses (21%). In London, the anticipation of flat ownership was notably higher at 38%, surpassing other regions where the figure stood at 26%.

In conclusion, the landscape of first-time home buying is evolving, with buyers exhibiting resilience, adaptability, and a determined spirit in the face of changing economic dynamics and market challenges.

What Could This Mean For The Future?

At the moment there is no guarantee on the housing market. The dilemma that first-time buyers face is the deposit required to purchase their first home is on average £61,000. This figure varies by location but even in the northeast of England saving for a £138,000 house is a challenge. 

Once on the housing market, homeowners are struggling with the cost of living crisis so may enter into the dangerous position of mortgage arrears due to additional expenses. 

Read more: A Glossary of UK Mortgage Terms For Homeowners

This is seen as the average first-time buyer's house price increased by 18% between May 2016 and May 2021, from £178,923 to £210,480. However, the average UK salary rose just 12.5%, from £23,084 to £25,971 between 2016 and 2021. Showing the financial pressure people entering the housing market are under. 

Although first-time buyers are unlikely to be in arrears in their first few years of a mortgage it is possible. So first-time buyers should be aware of how to avoid repossession of their home. 

Before buying a home, financial projections are important to understand if you can afford to buy that property.

If you start to spot the signs you will be unable to afford your home then speak to experts. 

Homekeep Solutions is here to help you stop repossession and keep your home.