A new analysis suggests that the number of first time buyers has plummeted by over 10% in the past year.
When the pandemic struck in 2020, first-time buyer property purchases dropped significantly to 303,980. This marked a 13.5% annual drop, the largest annual decline in the last decade. However, the introduction of the stamp duty holiday in July 2020 helped to rejuvenate the market with the estimated number of first-time buyers rocketing to 405,320 in 2021, climbing 33.3% in a single year. Not only was this the highest annual increase in the last decade, it also pushed the number of first-time buyers within the market far beyond any level seen since 2012.
However, there are signs that the pandemic property market party may be over as there has been a sharp annual decline in FTB numbers over the last year. In 2022, there were an estimated 362,461 first-time buyers, a year on year dip of 10.6%. The largest annual reductions in FTB levels by region have come across Wales and the South East (both down 12.5%), Northern Ireland (down 12.2%) and the South West (down 12.1%).
The research is from property business Wayhome, whose chief executive Nigel Purves says: “The good news is that there are still more first-time buyers making it onto the ladder when compared to the pre-pandemic benchmark, but there are concerns this downward trend could become more prominent going forward. The cost of borrowing remains substantially more expensive despite mortgage rates starting to level out and we’re yet to see any real reduction in the already sky-high cost of a home. What’s more, the Help to Buy scheme has all but shut up shop and so there is very little help available for the nation’s first-time buyers when it comes to tackling the sizeable cost of homeownership.”
Should first time buyers be tempted into buy to let investment?
A high profile mortgage lender operating in the buy to let sector has launched a series of products aimed at investors who do not yet own their principal homes. The Suffolk Building Society has announced a series of new products and lending criteria changes to encourage younger investors.
Non-home owning applicants are told that full buy to let criteria will be applied including interest cover ratio and minimum income requirements. The society will also run a background affordability assessment. Existing buy to let landlords wishing to purchase or remortgage their own residential property will now be considered regardless of how many buy to lets they have in the background, as long as the buy to let portfolio is self-financing. Previously, the society had a limit of 10 buy to lets in the background but this criterion has now been removed to help landlords.
For ex-pats - a target market for this particular building society - applications will be accepted from first time buyers who are working and residing abroad and who have not owned a property before but who wish to purchase a rental property in the UK now. The society will no longer require returning expats to spend a set amount of time in the UK before applying for a mortgage. It’s common for lenders to require anything up to two years on home soil but this change allows expats to apply as soon as they return; this applies to both employed and retired applicants.
Non-UK nationals will also be accepted on a joint application where one applicant is a UK national. This means that the non-UK partner can now be named on the mortgage.
Charlotte Grimshaw, head of intermediary relations at Suffolk Building Society, says: “We know our niches extremely well and have a very good understanding of the issues facing brokers in these markets at the moment. It matters to us that we’re there to support those whose circumstances means they need a specialist lender on their side – particularly as everyone faces the uncertainty of the current economic climate.”