First-Time Buyers Now Need £43,000 More Than Six Years Ago To Buy Home | TOTUM
Ben Hayward May 18th
2022

First-time buyers now require £43,000 more than they would have needed six years ago to purchase their first home, new research has revealed. 

Since 2016, house prices for first-time buyers have been increasing by £23.89 per day on average, meaning people making their first step onto the property later are now paying an average of £223,751 for their first home.

The new data, from Direct Line Home Insurance, shows the figure is £43,623 more than it was six years ago, with certain regions seeing even sharper increases in property prices.

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Burnley in Lancashire has seen house prices rise by 45% over the past five years, while the Orkney Islands in Scotland has seen prices jump by 44%. In Rossendale, property prices are up 42% while neighbouring Bury has seen rises of 40%.

However, despite these increases, the average salary of someone in their thirties has risen by just 10%, meaning the average first-time buyer's property will now set you back roughly seven times the average wage of a 30 to 39-year-old.

London remains the most expensive part of the country for first time buyers - the average price is £440,590 - with Barking and Dagenham, Hackney, Waltham Forest, Redbridge and Havering all seeing the largest jumps with increase of over £55,000 on average over the period. 

Head of Direct Line Home Insurance, Dan Simson, said: “The rate at which FTB prices have been increasing is frankly frightening.

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“However, this generation of property owners are facing the challenge of dramatically increasing property prices in traditionally popular areas such as London and instead are buying in places that are less well known.

“We may see an even more dramatic emergence of these 'young towns & cities' with the increasing prevalence of remote working that enables people to be far more flexible as to where they live.”

As well as the prices themselves, research from last year showed that the average deposit for a house in 2020 was £57,278 - a rise of 23% from £46,449 in 2019.

However, according to the Halifax bank's index, despite the prohibitive price increases - as well as low-deposit mortgages being retracted due to coronavirus - first-time buyers still accounted for half of all home purchase loans in 2020, slightly down from 51% the previous year. 

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According to Halifax, there were 304,657 first time buyers in 2020, the lowest number since 2015, and down around 46,000 from 2019, with the biggest drops seen in Wales, Northern Ireland and Scotland.

Russell Galley, managing director, Halifax, said: "Despite the obvious challenges presented by soaring house prices, not least the need to raise an even bigger deposit, first-time buyers still accounted for half of all home purchases, a reassuring statistic given their overall importance to the market.

"However, with the economic impact of the pandemic likely to be felt most keenly by the young and those in lower-paid jobs, the need to prioritise improved housing availability and affordability for all those looking to make that first step on to the property ladder becomes ever greater."

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