UK first-time buyer home purchases surge 35% to reach 19-year high

Home purchases by first-time buyers rose by 35% last year to their highest level since 2002, according to estimates by the Yorkshire Building Society.

Despite strong house price growth, transactions by first-time buyers grew to an estimated 408,379 in 2021 from around 303,000 the previous year, the building society said.

It was the first time the total passed the 400,000 mark for 15 years and was more than double the levels in the years following the global financial crisis of 2007-08.

First-time buyers accounted for half of house purchases with a mortgage in 2021, which was the same proportion as in 2020.

“Clearly, new buyers have not been deterred by the price of a typical first-time buyer home, which has increased by 9% to £222,997 in the year to October,” the building society said.

Home buyers were helped to take the first step on the property ladder by the stamp duty holiday, which ended on 30 September last year, and by low borrowing costs and government guarantees for mortgages.

In addition, many first-time buyers may have been able to save more than expected for a deposit as spending plummeted during the COVID-19 pandemic lockdowns.

Nitesh Patel, strategic economist at YBS, said: “The performance of the first-time buyer market in 2021 has been extraordinary, particularly against the backdrop of uncertainties caused by the lockdown in the early months of the year.

“There are some strong drivers of demand that explain the increased volumes. Low borrowing costs is an important factor and the increased availability of more low-deposit mortgages has also been an enabler mostly for first-time buyers.

“Unemployment has also been falling for the last year and the jobs market has been getting stronger since the phased reopening in April.”

Yorkshire Building Society said it was unlikely that first-time buyer numbers would continue at last year’s high level during 2022 and beyond.