UK house sales to first-time buyers reach highest for 19 years

The number of UK first-time homebuyers has hit its highest level since 2002, according to a new estimate.

Despite the uncertainty generated by the pandemic and strong house price growth, the number of first-time buyer transactions in 2021 is estimated to be 408,300, according to Yorkshire Building Society.

That would be a 35% increase on the 303,000 transactions in 2020, and more than double the levels in the years following the global financial crisis of 2007-08.

The previous first-time buyer peak was in 2002, when 531,800 households took their first step on to the housing ladder, and one would need to go back 15 years to see numbers similar to those being predicted for 2021, said the Yorkshire. In 2006, the number of first-time buyers was 400,900.

“Clearly, new buyers have not been deterred by the price of a typical first-time buyer home, which has increased by 9% to £222,997 in the year to October,” the building society said.

Average house prices have surged to record highs over the past year, presenting an obstacle to many trying to buy their first home. Meanwhile, the continuing pandemic – including a third national lockdown running from January until March last year – is likely to have caused some to put their home-buying plans on hold.

However, a range of factors including low borrowing costs and government guarantees for mortgages arguably helped others to take their first step on to the property ladder.

The stamp duty holiday – which ended on 30 September 2021 in England and Northern Ireland – has been credited with fuelling a boom in the market. First-time buyers already benefited from stamp duty relief on the first £300,000 of the purchase price, but the additional relief on the value between £300,000 and £500,000 will have led to savings – and reduced borrowing – in many cases, particularly benefiting new buyers in pricier areas such as London and the south-east, said the society.

Meanwhile, many people’s spending plummeted during the lockdowns, which meant some would-be first-time buyers were able to save up a larger sum for a deposit more quickly than perhaps they had anticipated.

The new figures are for first-time buyers purchasing with a mortgage.

However, Yorkshire said it was unlikely that first-time buyer numbers would continue at this level during 2022 and beyond.

First-time buyers accounted for half of house purchases with a mortgage in 2021, which is the same proportion as last year, though in the years between 2006 and 2011 the figure was below 40%.

The analysis was based on lending figures up to October 2021 from the banking body UK Finance, with Yorkshire Building Society making estimates for November and December last year.