First-time buyer numbers fall 9% in 2022, says building society

The number of people taking their first step onto the property ladder was estimated to have fallen to 370,287 across the year.

The housing markets in 2020 and 2021 were skewed by the impacts of the coronavirus pandemic, industry experts said (Yui Mok/PA) (PA Archive)

The number of first-time buyers is estimated to have fallen by around 9% in 2022, according to analysis by a building society.

Across the UK, the number of people taking their first step onto the property ladder was estimated to have fallen to 370,287 across 2022, edging down from a 20-year high of 405,320 in 2021, Yorkshire Building Society said.

The housing markets in 2020 and 2021 were skewed by the impacts of the coronavirus pandemic, the mutual added.

Demand from first-time buyers remains strong, even with house prices being at historic highs for much of the year and the country experiencing such political and economic uncertainty

Nitesh Patel, Yorkshire Building Society

It said its estimate for 2022 would still represent a 5% annual increase, compared with 2019.

But although the number of first-time buyers in 2022 was thought to be fewer overall than the previous year, those who bought a property for the first time in 2022 were believed to represent more than half (53%) of all house purchases with a mortgage, up from 50% in 2021, and 41% a decade ago.

So, these latest estimates by the mutual still signal strong demand for first-time buyers, even with the average price of a typical first-time buyer home rising by 10%, or £25,621 in cash terms, to £272,500 in the past year.

Nitesh Patel, strategic economist at Yorkshire Building Society who made the forecast, said: “The year started much as 2021 had ended, with the supply of a significant number of low-deposit mortgages, an overflow of healthy deposits from the build-up of household savings balances during the pandemic years and a steady economic picture.

The one constant in the housing market - the lack of supply at all stages of homeownership - will remain, which will help to maintain house prices

Nitesh Patel, Yorkshire Building Society

“Then came the infamous mini-budget which sparked panic in the mortgage market, leading to low product availability, higher borrowing costs and a slowdown in house price growth among other things.

“Coupled with the absence of a stamp duty holiday this year, these factors may mean this latest forecast is unsurprising, but it still shows that demand from first-time buyers remains strong, even with house prices being at historic highs for much of the year and the country experiencing such political and economic uncertainty.

“The one constant in the housing market – the lack of supply at all stages of homeownership – will remain, which will help to maintain house prices.”

A string of Bank of England base rate hikes has been pushing up borrowers’ costs in general, while rising household bills will also be having a wider impact on what home buyers can afford.

The calculations were made using data from trade association UK Finance up to October 2022, with the November and December transactions being estimated by Yorkshire Building Society.