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Lloyds Banking : Halifax First-Time Buyer Review 2021

01/21/2022 | 08:04pm EDT

Last year saw first-time buyer (FTB) numbers rise at a record rate (up 35%) to 409,370 despite low affordability, according to new analysis from Halifax. The average buyer in 2021 was 32 years old and put down a £53,935 deposit on a first property costing £264,140.

Rising numbers of first-time buyers

Since 2009 first-time buyer numbers have more than doubled. With an increase of over 100,000 in the last 12 months, a total of 409,370 new buyers entered the housing market in 2021, up 35% on 2020.

Despite this surge in numbers, first-time home purchasers remained at around half of all home loans.

Number of first-time buyers Annual % change First-time buyers as % of all home purchase loans
2009 193,940 39%
2010 193,590 0% 37%
2011 187,990 -3% 38%
2012 211,920 13% 40%
2013 258,210 22% 44%
2014 310,280 20% 46%
2015 298,090 -4% 46%
2016 328,500 10% 48%
2017 345,920 5% 49%
2018 353,120 2% 50%
2019 351,260 -1% 51%
2020 303,970 -13% 50%
2021 409,370 35% 48%

Sources: UK Finance and *Halifax estimate for 2021

Each region across the UK saw a marked rise in the number of new buyers in the market last year. The biggest increase was in London, where numbers rose 49%. The smallest, Scotland, still saw an increase by a quarter (24%). The number of first-time buyers has more than doubled over the last 10 years in every region except London (+82%).

Region 2011 2020 2021* 10-year change 1-year change
North 8,370 13,890 18,422 120% 33%
Yorkshire and the Humber 15,010 25,070 32,792 118% 31%
East Midlands 12,780 23,110 29,850 134% 29%
East Anglia 6,750 11,010 14,640 117% 33%
Greater London 31,290 38,140 56,857 82% 49%
South East 36,630 61,250 85,666 134% 40%
South West 14,670 24,250 32,017 118% 32%
West Midlands 14,740 25,570 33,798 129% 32%
North West 18,470 32,050 40,748 121% 27%
Wales 8,060 12,310 16,815 109% 37%
Scotland 16,220 28,740 35,627 120% 24%
N. Ireland 4,690 8,570 12,110 158% 41%
UK** 187,990 303,970 409,370 118% 35%

Sources: UK Finance and *Halifax estimate for 2021, **Region totals will not equal UK total due to rounding

Prices rose and deposits fell

As more buyers entered the market the average first-time buyer deposit fell 6% for the UK, with only Wales and Scotland noting an increase regionally. This fall in the UK average was set against a rise in the average purchase price of first homes, which meant that, overall, the gap between purchase price and deposit widened in every region.

Region Average House Price 2020 (£s) Average House Price 2021 (£s) 1 Yr % change in Average Price Average Deposit 2020 (£s) Average Deposit 2021 (£s) Deposit as % of purchaseprice 2021 1 Year % change in Deposit
London 488,771 475,819 -3% 130,281 115,759 24% -11%
Scotland 154,821 166,919 8% 35,607 37,038 22% 4%
South West 239,434 252,263 5% 51,178 49,592 20% -3%
South East 322,386 320,591 -1% 66,706 60,953 19% -9%
Northern Ireland 147,394 156,594 6% 29,546 29,199 19% -1%
Wales 165,272 180,392 9% 32,368 33,622 19% 4%
East of England 297,548 303,166 2% 58,531 55,250 18% -6%
North West 175,389 189,588 8% 34,185 33,983 18% -1%
West Midlands 204,948 209,270 2% 41,928 37,159 18% -11%
East Midlands 199,503 210,203 5% 39,077 37,171 18% -5%
North East 145,254 151,814 5% 28,643 26,769 18% -7%
Yorks & Humber 167,267 177,683 6% 33,032 31,212 18% -6%
UK 256,057 264,140 3% 57,278 53,935 20% -6%

Aging buyers

The average age at which someone buys their first home has risen to 32, up from 29 in 2011 and is now over 30 in every UK region.

Region Average Age 2011 Average Age 2021
North East 28 30
North West 29 31
Yorkshire and The Humber 28 30
East Midlands 29 31
West Midlands 29 32
East of England 30 32
London 32 33
South East 31 32
South West 30 31
Wales 28 31
Scotland 29 31
Northern Ireland 30 32
UK 29 32

Esther Dijkstra, Mortgage Director at Halifax, said: "There were a number of factors influencing home buying decisions in 2021. While working from home and the 'race for space' was key for many, particularly movers, it's clear that the Stamp Duty holiday increased the availability of first-rung homes as others moved up the ladder.

"Lifestyles have changed; over time more people have chosen to go on to higher education, go travelling, or move around for work, which are all factors in the increase in first-time buyer age. However, undoubtedly, the biggest drivers are the cost of homes and the need to save a significant deposit to get on the housing ladder.

"In 2021, the increase in average house price to £264,140, combined with difficulties in raising a deposit, meant that the gap between purchase price and deposit widened in every region in the UK."

Low affordability across the UK

The growth of house prices has outstripped that of incomes and the average price to earnings ratio for UK first-time buyers now stands at 6.9x Affordability in all but three local authorities has fallen since 2011: Clackmannanshire (-5%) and Moray (-1%) saw the gap between house prices and wages (P/E ratio) narrow slightly, while in East Ayrshire it was flat.

One local authority, Merton, saw the P/E ratio more than double (108%), meaning affordability halved, with Reigate and Banstead nearly doubling (+97%).

Local authorities with largest deterioration in FTB affordability

Local Authority Average price 12 months to Dec 2021 (£) Ave earnings 2021 est (£) P/E ratio 2021 P/E ratio 2011 Deterioration in affordability
Merton 513,811 51,880 9.9 4.8 108%
Reigate and Banstead 386,719 47,929 8.1 4.1 97%
South Kesteven 250,788 36,152 6.9 3.6 94%
Westminster 682,361 67,962 10.0 5.2 94%
Ashford 298,239 35,216 8.5 4.4 92%

The price of an average FTB home is now less than four times the average income, considered the limit for affordability, in just 15 local authorities (LAs) around the UK. The least affordable LA for FTBs is the London borough of Brent, where homes are 12.3x average earnings (P/E ratio), while the most affordable is Clackmannanshire in Scotland, where it is just three times. (See Appendix for regional information.)

Most and least affordable local authorities

Most affordable:

Local Authority Region P/E Ratio 2021
Clackmannanshire Scotland 3.0
West Dunbartonshire Scotland 3.2
East Ayrshire Scotland 3.2
North Ayrshire Scotland 3.3
Renfrewshire Scotland 3.5

Least affordable:

Local Authority Region P/E Ratio 2021
Brent London 12.3
Camden London 12.2
Haringey London 11.4
Waltham Forest London 10.9
Hillingdon London 10.6

Disclaimer

Lloyds Banking Group plc published this content on 22 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 January 2022 01:03:00 UTC.


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