How large a deposit do first-time buyers across Britain need?

The average deposit needed to get on the housing ladder fell by 15 per cent last year, according to one of the UK’s largest mortgage lenders.

It means first-time buyers paid £9,057 less for their homes in 2023 than they did the previous year, according to research commissioned by Halifax.

However, they still put out a typical amount of £53,414, which represents around 19 percent of the average purchase price.

ON THE LADDER... FOR LESS: Typical home prices and deposits for first-time buyers fell last year, according to Halifax

ON THE LADDER… FOR LESS: Typical home prices and deposits for first-time buyers fell last year, according to Halifax

The new figures are based on mortgage lending provided by Halifax and sister banks Lloyds and Bank of Scotland.

The average cost of a home for a first-time buyer fell by 5 per cent, from a peak of £302,008 in 2022 to £288,136.

This compares with an overall rise in UK house prices of 1.7 per cent, according to figures previously published by Halifax, or a fall of 1.8 per cent according to Nationwide.

The average cost of a home for a first-time buyer fell by 5 per cent, from a peak of £302,008 in 2022 to £288,136.

This compares with an overall rise in UK house prices of 1.7 per cent, according to figures previously published by Halifax, or a fall of 1.8 per cent according to Nationwide.

Where is the cheapest place to buy?

The cost of property remains high, at around 6.7 times the average UK salary of £43,257.

This average earnings figure is based on the ONS’ annual Survey of Working Hours and Earnings for the second quarter of 2023, brought up to October 2023, and refers to the average number of full-time employees.

This is higher than the average annual gross income of full-time employees in the period, which was £34,963.

Affordable property prices depend on where you look in the UK.

Average deposits for first-time buyers in the East Midlands fell by the most in 2023 compared to 2022, falling by 16 per cent.

London and the South East both saw falls of 15 per cent, although they still had the largest cash deposits at £108,848 and £59,075 respectively.

First-time buyers in Islington, north London, continue to face property prices 10.6 times the local average salary of £57,548, making it the most expensive area in the country.

Meanwhile, many of the most affordable places to buy a first home are in Scotland.

Inverclyde in west-central Scotland is the most affordable, with starter homes costing 2.6 times the local average salary of just £41,598.

The total number of people on the housing ladder also fell by a fifth last year.

That’s the largest decline since at least 2013, when Halifax began collecting data. Even in 2020 amid the pandemic, numbers were down just 13 percent.

The biggest falls were seen in East Anglia and the South East, both of which saw first-time buyer numbers fall by 24 per cent. Scotland was the most resilient, despite numbers falling by 10 per cent.

First-time buyers still make up 53 percent of home purchase mortgages, up one percentage point from 2022, reflecting the fact that there has been a decline in housing transactions across the market.

This is due to high mortgage rates and inflation, which have restricted household budgets.

What do people pay?  This shows average house prices and deposits for first-time buyers in 2022 and 2024

What do people pay? This shows average house prices and deposits for first-time buyers in 2022 and 2024

“It is not surprising given the wider economic environment that the number of first-time buyers joining the property market will fall again in 2023 to around 293,000,” said Kim Kinnaird, director of Halifax Mortgages.

Despite this decline, new buyers accounted for more than half of all home loans. However, to get a foot on the ladder, most people are now buying first-time joint names.

“The general decline in house prices we have seen in 2023 will go some way to helping people get onto the ladder for the first time – but these buyers are still relying on a steady supply of properties in their price range, while they face the problem of continued pressure.” On saving for a deposit, when rent and living costs are high.

Joint thinking: Terraced houses are the most popular property type for first-time buyers

Joint thinking: Terraced houses are the most popular property type for first-time buyers

Which homes do first-time buyers buy?

Terraced houses were the most popular property type among first-time buyers last year, according to Halifax 30 percent of all new mortgages were to first-time buyers last year.

However, this number has decreased by 7 percentage points compared to ten years ago.

First-time buyers have been increasingly purchasing apartments over the past decade, up six percentage points compared to 2013.

London has seen the biggest increase in first-time buyers choosing an apartment to make a home, making up 72 per cent of purchases in 2022 compared to 59 per cent in 2013.

According to analysis by Halifax, first-time buyers are now aged 32 on average and 30 or older in all regions of the UK.

Ribble Valley in the North West has its youngest first-time buyer at 27 years old. The oldest first-time buyers, aged 37 years on average, are found in Slough in the south-east.

Halifax also noticed that more buyers were buying with someone else, or with more than one person.

It said nearly two-thirds of mortgage completions (63%) were in joint names with two or more people.

According to the latest ONS data, covering 2022, people living alone make up 13 per cent of the population and 30 per cent of total households.

Another 10 percent of families consist of a single parent living with their children.

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(Tags for translation) Daily Mail

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