First-time buyer mortgage sales in London declined significantly between 2013 and 2023, as increasing numbers of buyers purchased homes further from the capital, according to an analysis by the Office for National Statistics (ONS).
The ONS, using Financial Conduct Authority (FCA) data published at the local authority level for the first time, found that several London boroughs experienced some of the largest drops in first-time buyer mortgage rates in the UK over the decade.
A similar pattern was observed in other major cities across the country, where first-time buyer mortgage sales either fell or grew at a slower pace than in surrounding areas.
In 2023, the South East overtook London as the region with the highest share of new first-time buyer mortgages, accounting for 13.8% of sales. The North East of England and Northern Ireland saw the fastest growth in first-time buyer activity.
DOWNWARD TREND
Nationwide, the total number of new first-time buyer mortgages has been on a downward trend since peaking in 2021.
In 2023, just 282,000 new first-time buyer mortgages were issued – the lowest figure since 2013.
Despite the overall decline, first-time buyers represented a larger share of total residential property sales in 2023 (38.4%) compared to 2013 (28.0%).
LONDON FALLING
London is no longer the leading location for first-time buyer mortgages. In 2023, just 12.7% of first-time buyer mortgages were issued for properties in the capital, down from 16.8% a decade earlier.
Of the 10 local areas with the highest rates of first-time buyer mortgages per 1,000 dwellings in 2023, only one was in London – compared to six in 2013.
Between 2013 and 2021, when first-time buyer mortgage sales peaked, only 10 local authorities in the UK saw declines in their first-time buyer mortgage rates – eight of which were in London.
This shift underscores a broader trend of affordability challenges pushing first-time buyers away from the capital and toward other regions.
BIGGEST CHALLENGES
Richard Donnell, Executive Director at Zoopla, says: “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).”
IMPORTANT BUYER GROUP
And he adds: “First-time buyers are an important buyer group accounting for a growing share of housing sales – in 2013/14 first-time buyers accounted for 30% of sales with that figure increasing to 36% of annual housing sales last year.
“The trend in recent years has seen first-time buyers account for a larger share of sales as existing owners have tended to move less often and use permitted development rights to extend and add value to their homes, rather than pay stamp duty and moving costs.
“Higher house prices, higher mortgage rates and the impact of mortgage regulations have compounded the problems for those buying their first home in southern England.”
“Higher house prices, higher mortgage rates and the impact of mortgage regulations have compounded the problems for those buying their first home in southern England.
“This has exacerbated pressures in the rental market pushing rents higher. There is a case to ease mortgage regulations and help more first-time buyers access housing and reduce the pressure on the rental market.”
PRICED OUT
Toby Leek, President of NAEA Propertymark, adds: “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. This is spurring on aspiring buyers to relocate to more affordable areas of the country.
“Alongside this, other factors will continue to make it increasingly difficult for those looking to step onto the property ladder for the first time moving forward.
“With the average age of a first-time buyer increasing to around 33.5 years old and the amount of money needed to be put down as a deposit on a home continuing to rise to around £50,000, many people may find their home ownership aspirations hard to achieve.”
SUPPORT MECHANISMS
He adds: “To combat this, the UK Government and the devolved administrations need to implement support mechanisms to enable more people to buy their first home well into the future, as well as continue in their missions of building new homes for a growing population, as an undersupply of properties will push up house prices even further.”
