Mortgage sales for first-time buyers in the UK have reached their lowest point in over a decade, with new data revealing that 2023 marked the fewest first-time buyer mortgages since 2013.
The Office for National Statistics (ONS) analysed data from the Financial Conduct Authority (FCA) and found 282,000 new first-time buyer mortgages in 2023 – down from the peak of 394,000 in 2021.
This drop comes after a period of strong growth in the early 2010s, when first-time buyer mortgages steadily increased following the 2008 global financial crisis.
In 2023, first-time buyer mortgages accounted for 38.4% of all residential property sales, up from 28% a decade earlier. The surge in first-time buyer activity following the 2008 crash was followed by a major dip during the pandemic. In 2020, the number of first-time buyer mortgages fell to just 297,000, amid lockdown restrictions and economic uncertainty.
However, the following year saw a rebound, with 2021 reaching the highest number of new mortgages in recent years, largely driven by the temporary stamp duty holiday, which ran from June 2020 to July 2021.
Since 2021, though, the trend has reversed, with sales dropping by nearly 30% between 2021 and 2023, landing at 282,000 – a figure not seen since 2013. Despite this, the proportion of first-time buyers relative to overall housing sales has continued to rise steadily.
Between 2006 and 2008, fewer than a quarter of residential sales were made up of first-time buyer mortgages. This figure grew to around one-third (33.8%) by 2018, and by 2023, it had reached 38.4%. This shift is largely due to a faster decline in overall housing sales between 2021 and 2023 (-39.8%) compared to the fall in first-time buyer mortgage sales (-28.6%).
London no longer the top location for first-time buyers
Once the dominant region for first-time buyer mortgages, the capital now accounts for just 12.7% of all sales, down from 16.8% over a decade ago.
Back in 2013, the areas with the highest rates of first-time buyer mortgages were all in London. In particular, Lambeth, Tower Hamlets, and Wandsworth led the pack. However, these areas have seen some of the largest falls in first-time buyer mortgage rates over the last decade, with Lambeth and Tower Hamlets both experiencing declines of over 30%.
Richard Donnell, executive director at Zoopla, said: “First-time buyers struggle where the cost of buying a home is the greatest, increasing the need for a larger deposit and a higher income to buy. First-time buyers face the biggest challenges in London where sales have fallen according to latest ONS data. The average household income of a first-time buyer in London is £100,000 and the average deposit required is £150,000 (ONS)."
He added that rising house prices, higher mortgage rates, and stricter mortgage regulations have made it more challenging for first-time buyers, particularly in southern England, and suggested that easing mortgage regulations could help reduce pressure on the rental market.
Toby Leek, president of NAEA Propertymark, warned that many first-time buyers are being “priced out of cities” – particularly in London, where the dream of homeownership is slipping further out of reach for younger buyers. “Many first-time buyers are being priced out of cities, especially throughout London where they have grown up or have a desire to nest themselves,” Leek said.
He pointed out that the average age of a first-time buyer has risen to 33.5 years, and the amount needed for a deposit is now averaging £50,000. “With the amount of money needed for a deposit continuing to rise, many people may find their homeownership aspirations hard to achieve.”
While London’s share of first-time buyer mortgages continues to shrink, the South East of England has emerged as the region with the highest share of new homeowner sales in 2023, accounting for 13.8% of the market.
Across the UK, many areas have seen marked growth in the number of first-time buyer mortgages. In 2023, Dartford in the South East saw the highest rate of first-time buyer mortgages, with 20.2 sales per 1,000 dwellings, followed by Harlow in the East of England (16.3 per 1,000) and Nuneaton and Bedworth in the West Midlands (15.5 per 1,000).
These areas also experienced some of the fastest growth rates in the decade leading up to 2023, with Harlow, Nuneaton and Bedworth, and Dartford all seeing increases of more than 30%.
In Scotland, Wales, and Northern Ireland, first-time buyer mortgage sales are seeing faster growth, especially in rural and suburban areas. In Scotland, areas like South Lanarkshire, North and South Ayrshire, and West Dunbartonshire have seen growth rates above 35%. Metropolitan regions like Dundee, Glasgow and Edinburgh have had slower increases in first-time buyer activity, suggesting a growing disparity between urban and rural markets.
Similarly, in Wales, regions like Newport and Torfaen have reported the strongest growth in first-time buyer sales, with rates increasing by more than 40% since 2013. Meanwhile, Cardiff, which had the highest rate of first-time buyer mortgages in 2013, has seen more modest growth, up just 8.6% over the past decade.
In Northern Ireland, Belfast has seen solid growth, with the highest increase among devolved capitals, rising 27.9% from 2013 to 2023. However, Antrim and Newtownabbey have seen even higher growth rates of 37.7%.
The trend of rising first-time buyer mortgage sales in rural areas and regions outside of major cities suggests that while the path to homeownership may be narrowing in traditional hotspots like London, opportunities are emerging in more affordable markets across the UK.
Mark Eaton, chief operating officer at longer-term fixed rate lender April Mortgages, said: "“Getting on the property ladder in the capital is almost impossible on your own and most joint mortgage applicants still require huge deposits.
“Our own research shows that a couple earning an average salary in the capital would need a deposit of over £200,000 to buy a home in nearly half of all London boroughs.
“One solution is longer-term mortgages of 10-years or more, which reduce monthly repayments and help borrowers qualify for larger loan amounts. This could improve affordability and enable more first-time buyers to purchase in high-cost areas, but it won't fix the problem on its own.
“The strongest first-time buyer activity is now outside London, particularly in the North East and Northern Ireland, where property remains more affordable.”
