The number of first-time buyers fell 22% between January and August this year, compared with the same period in 2022, according to the latest Halifax first-time buyer review.
The bank says the growth in house prices over the past decade means raising a suitable deposit is a significant hurdle.
Increases to mortgage interest rates and periods of lower availability of mortgage deals has meant buyers now need, on average, a £54,116 deposit towards purchasing their first home, compared with £31,060 in 2013.
In addition to that, the UK property market has faced a number of challenges in recent years as a result of interest rate hikes.
The recent growth in pay has impacted housing affordability for first-time buyers. According to Halifax, the house price to income ratio for first-time buyers has fallen from 5.8 in June last year, to 5.1 currently, making it the most affordable since June 2020 – if they can save for the deposit.
Prices are also falling, Halifax data revealed that first-time buyers now pay an average £288,030, down 2%, in the past year.
Kim Kinnaird, director at Halifax Mortgages, said: “Getting the keys to your first home is a significant milestone in anyone’s life – we’ve lent £5.5bn to first-time buyers in the first six months of the year, helping people make their home-owning dreams a reality.”
According to Halifax, the average age of those buying their first property is now 32. And most people buy a house in joint names which helps both in terms of costs and affordability.
A record number of first-time buyers took advantage of low interest rates and government help in the previous two years, post-pandemic. This means first-time home buyers have risen by 17% compared to 10 years ago.
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Scotland has been recognised as the UK’s most affordable place for first-time buyers to get on the property ladder, at almost £100,000 less than the UK average.
Meanwhile, London and East Anglia showed the second highest fall (29%) in first-time buyers purchasing a home.
London was the only region to see a decline (9%) in proportion to people entering the property market compared with 2013.
The study also revealed that the South East has the second most expensive average property prices in the UK this year, although it was much higher in comparison to 10 years ago.
First-time buyers in London are burdened with the biggest deposit (average £113,078) while those in the North East are putting down the lowest amount, at an average of £29,184, reported Halifax.