First-time buyer total ‘topped 400,000 last year for first time since 2006’

The number of people taking their first step on to the property ladder with a mortgage last year is estimated to have topped 400,000 for the first time since 2006.

But Yorkshire Building Society (YBS), which made the calculations, said it is unlikely that first-time buyer numbers will continue to be seen at this level in 2022 and beyond.

First-time buyers accounted for half (50%) of house purchases with a mortgage in 2021, up from just over a third (36%) in 2007, according to the YBS.

Across the UK, it estimates there were 408,379 mortgaged first-time buyers in 2021.

It is the first time the total has passed the 400,000 mark since 400,900 first-time buyers were recorded in 2006.

The analysis was based on lending figures from trade association UK Finance up until October 2021, with the YBS making estimates for November and December last year.

The first-time buyer total in 2021 was a 35% increase compared with 2020, when the figure was 303,000.

The YBS said a previous first-time buyer peak was reached in 2002, when 531,800 took their first step on to the housing ladder.

Last year’s total is more than double the number in the aftermath of the financial crisis in 2008, when the figure was 191,000.

House prices generally have surged to new record highs over the past year, presenting an obstacle to those trying to get on the property ladder. Some people may find that prices have increased by more than they have earned over the past year.

Low mortgage rates are helping to keep payments on home loans relatively affordable.

Yorkshire Building Society said the price of a typical first-time buyer home increased by 9% to £222,997 in the year to October.

A year earlier, the average first-time buyer home had cost £204,230 – £18,767 less.

Nitesh Patel, strategic economist at YBS, said: “The performance of the first-time buyer market in 2021 has been extraordinary, particularly against the backdrop of uncertainties caused by the lockdown in the early months of the year.

“There are some strong drivers of demand that explain the increased volumes. Low borrowing costs is an important factor and the increased availability of more low-deposit mortgages has also been an enabler mostly for first-time buyers.

“Unemployment has also been falling for the last year and the jobs market has been getting stronger since the phased reopening in April.”

He added: “In the near term housing demand will continue to exceed supply; however, with prices at an elevated level in comparison to local earnings, this should dampen activity. Therefore, it’s unlikely that we will continue to see first-time buyer numbers at this level in 2022 and beyond.”