First-time buyer numbers slide -10.6% in a year

Pandemic property party over for first-time buyers as numbers slide -10.6% in a year

Research by the Gradual Homeownership provider, Wayhome, has revealed that while the pandemic market boom saw a record increase in the number of first-time buyers (FTB) purchasing a home, the party could be over as this figure has fallen sharply over the last year.

Wayhome analysed FTB transaction levels to see just how many first-time buyers made it onto the ladder during the pandemic property market boom and how this has changed over the last decade.

When the pandemic struck in 2020, first-time buyer property purchases plummeted, with the number of those buying their first home falling to 303,980. This marked a -13.5% annual drop, the largest annual decline in the last decade (2012 to 2022) and just the third annual decline seen between 2012 and 2020.

However, the introduction of the stamp duty holiday in July 2020 helped to rejuvenate the market to an alarming extent, with the estimated number of first-time buyers rocketing to 405,320 in 2021, climbing 33.3% in a single year.

Not only was this the highest annual increase in the last decade, it also pushed the number of first-time buyers within the market far beyond any level seen since 2012.

However, there are signs that the pandemic property market party may be over as there has been a sharp annual decline in FTB numbers over the last year. In 2022, there were an estimated 362,461 first-time buyers, a year on year dip of -10.6% versus the record levels seen in 2021.

With the exception of the -13.5% reduction spurred by the pandemic in 2020, this is just the fourth and by far the largest annual decline seen in the last decade.

There is one silver lining to this decline, as despite such a sharp annual reduction, the number of first-time buyers in 2022 remained some way above pre-pandemic market levels and the second highest annual level in the last decade.

The largest annual reductions in FTB levels by region have come across Wales (-12.5%), the South East (-12.5%), Northern Ireland (-12.2%) and the South West (-12.1%).

Co-founder and CEO of Wayhome, Nigel Purves, commented:

“Despite the fact that the pandemic market boom pushed house prices to record highs, we saw a huge boost to the number of first-time buyers making it onto the property ladder and this was largely driven by extremely low mortgage rates, as well as the additional carrot of a stamp duty saving.

However, this number has declined considerably over the last year and there’s no doubt that growing market uncertainty and a consistent string of interest rate hikes has contributed to this.

The good news is that there are still more first-time buyers making it onto the ladder when compared to the pre-pandemic benchmark, but there are concerns this downward trend could become more prominent going forward.

The cost of borrowing remains substantially more expensive despite mortgage rates starting to level out and we’re yet to see any real reduction in the already sky-high cost of a home.

What’s more, the Help to Buy scheme has all but shut up shop and so there is very little help available for the nation’s first-time buyers when it comes to tackling the sizeable cost of homeownership.

Gradual and shared homeownership models are really the only remaining step up, but we simply can’t fill the void alone, and so the onus is now on the government to step up and address the issue for those who simply can’t make the jump between the rental and housing markets.”