First-time Buying affordability: The Snakes & Ladders of the Property Ladder

As a financier of property transactions, from land purchases right through to the construction of entirely new homes, or the refurbishment or conversion of existing buildings, we take a keen interest in the health of the housing market, and in particular, in the fortunes of the first-time buyers on whom it depends.

After all, most property chains rely on new money entering the market at the bottom, to oil the wheels and keep people and transactions on the move, as their life, family and work aspirations evolve.

Atelier commissioned this paper as the market stands at a critical juncture – the pandemic has simultaneously created economic uncertainty, an unsteady employment backdrop and a rapid shift in buyer demand. It comes after the market received extensive Government support through Help to Buy and the Stamp Duty holiday. That stimulus, coupled with the reassessment many people made during lockdown of what they want from their home, has pushed up the demand for property to its highest level in 15 years. Some major mortgage lenders report that applications are up 50% on their pre-pandemic level, and Land Registry data shows average prices across the UK rose by 8.9% in the 12 months to the end of April.

Rising property prices and a surge in market activity have never been the friend of the first-time buyer. To better understand how the current market might impact them, and to assess the risks on the property development market and assist our professional borrower base, we asked our Consultant Economist, Bob Pannell, the former Chief Economist with the Council of Mortgage Lenders, to unpick the latest data.

Our findings shine a light on the tricky question of affordability for first-time buyers, shatter several myths, and identify a number of opportunities for mortgage lenders, the regulators and property developers to help struggling would-be buyers more.

Key findings at a glance

30% fewer first-time buyers today

Despite Government support and property ownership remaining the tenure of choice, there are 30% fewer first-time buyers today than there were at the peak in the 1980s.

First-time buyers are not getting older

Contrary to common perception first-time buyers are not getting older. The average age of a first-time buyer, 29, has barely changed in two decades.

Deposits have surged by 24% to £60,000 in the last year

The average mortgage deposit paid by first-time buyers has spiked to £60,000, favouring the well off and further pulling up the ladder for the less affluent.

Those on the ladder already are £1 trillion richer

Housing equity of around £1 trillion has been accrued by older borrowers.

The potential first-time buyer market is growing

There are now 10% more adults aged 25–34 – the cohort most likely to want to buy for the first time – than there were at the time of the global financial crisis (GFC).

Download our full paper to read all our findings and more.