An analysis from Yorkshire Building Society based on figures from UK Finance revealed that this was markedly lower than the recent 20-year high of 400,000 people who got onto the property ladder in 2021.
Compared to 2022, first-time buyer numbers in 2023 are expected to be down by 21 per cent. This is not as steep as the 30 per cent decline in overall buyer numbers last year which the mutual said demonstrated the determination of new homeowners despite market challenges.
Although there was a decline in numbers, first-time buyers made up 54 per cent of overall new house purchase activity in 2023, up from 53 per cent the year before and half that in 2021. It is also a jump from the 41 per cent share of first-time buyer activity in 2013.
The ‘privilege’ of homeownership
Yorkshire Building Society said the fall in first-time buyer numbers echoed its recent Home Truths study which showed that 78 per cent of prospective buyers felt homeownership was becoming an “elite privilege”.
In order to save for a home, a quarter said they were putting off marriage, 15 per cent said they were holding off on starting a family, while 55 per cent were foregoing everyday luxuries such as holidays.
First-time buyer ‘can do’ attitude
Ben Merritt, director of mortgages at Yorkshire Building Society, said it was encouraging to see the share of first-time buyers was holding up but said more could be done by the government and industry to support this cohort.
“First-time buyers are the lifeblood of the market and are still clearly keen to buy,” he said.
Merritt added: “There is no doubt their aspirations are being hampered by the multiple factors at play, which have resulted in the market contracting by up to 30 per cent this year, but still their numbers have only dropped by 21 per cent.
“This demonstrates a positive ‘can do’ sentiment with first-time buyers cutting their cloth in order to get on the housing ladder.
“Lenders like us remain committed to developing new products and services to help first-time buyers, through offerings like our £2,000 cashback initiative to help with purchase costs. However, as our Home Truths report showed, wider industry action is also needed to support first-time buyers. After all, the wider market relies on them, not least to support purchases higher up the chain.”
Max Shepherd, group economist at Yorkshire Building Society, added: “Current market expectations suggest several rate cuts in 2024, which would ease mortgage rates in the first half of the year.
“However, this isn’t all good news, as interest rates falling in this way reflects the poor health of the economy overall, which could mean low growth and higher unemployment, which would only increase the urgency around ensuring a concerted approach to supporting first-time buyers.”
