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Why First-time Buyers Have Hit A 12 Year High


It has been a very slow climb since the financial crisis of 2008, but in 2019, first-time buyers entering the housing market reached the highest levels since 2007.

Confidence appears to have risen slowly over the years since the banking crisis caused economic problems across the globe and had a dramatic impact on the mortgage industry, but 2019 saw nearly twice as many people climb onto the property ladder for the first time than in 2008.

The other takeaway from the first-time buyer statistics from 2019 was that 51% of all home buyers were entering the market for the first time. This is a rise of 13% since 2008.

How has the increase to first-time buyers happened?

There are many reasons for the shift in demand for first-time mortgages, but one of the key reasons has been that mortgage providers have been approving mortgages that cover up to 95% of the cost of the property. This has greatly benefited new buyers who may have found the amounts previously required to put down as a deposit to be unwieldy.

Following the downturn in 2008, mortgage providers tightened their belts and the deposit required to buy a home began to rise considerably. Prior to this, mortgage companies had often provided 100% mortgages and had been less strict on credit. But this all needed to change in order to turn the economy around.

With a change in the retirement age and people living and working longer, it is becoming increasingly more common to see longer-term mortgages of anything up to 40 years. This has helped make the monthly mortgage repayments lower.

In addition to the changes brought about by lenders, the governments Help to Buy scheme has also been of great benefit too. Many first-time buyers joined the property ladder with the assistance of Help to Buy ISAs, where the amount saved by the buyer was matched by the government.

Stamp duty relief for the first £300,000 of the property value was also something that helped make it much easier for new buyers to get on the ladder.

What Will Happen Next In The Property Market?

While the figures of first-time buyers may have risen dramatically since 2008, it is fair though to say that these figures have slowed dramatically in the last couple of years. While there was a year-on-year increase between 2018 and 2019, it was dramatically lower than it had been in previous years. This indicates that we have probably reached a peak in the number of first-time buyers who are stepping onto the ladder.

Over the last twelve years, house prices have risen at a much sharper rate than salaries, and this has had a dramatic effect on the number of people who have decided to take the leap and buy their first property. This means that in real terms it is taking many buyers far longer to save for their first deposit. The cost of houses is still a large factor in the slow increase of first-time buyers.