A 2024 report from the British Societies Association (BSA) states becoming a first-time buyer is “possibly the most expensive it has been over at least the past 70 years”…
Two Components to Affordability
There are two main elements to affordability: the cost of buying and the cost of owning, with not just the initial cost of buying a property to consider, but also the cost of actually owning a home and making mortgage payments.
Additionally, a report by housing market analyst, Neal Hudson, produced for the BSA states that affordability challenges faced by first-time buyers are not felt equally. Those who are on single-incomes, earning below the average income, on unstable incomes, or with less wealth, often find themselves stuck in the private rented sector.
Let’s Have a Look at Some of the Data…
The Skipton Group Home Affordability Index provides information on the costs of buying and running a home in Great Britain.
They found that:
- Almost 80% of potential first-time buyers lack adequate savings for the deposit needed to get on the property ladder in their area
- Almost 4 in 10 renters spend at least 45% of their income on essential housing costs
“One clear message that emerges from the data that underpins the Skipton Group Home Affordability Index is that the first step onto the property ladder is by far and away the hardest. Today’s research highlights a new urgency and criticality to the situation facing first- time buyers in Great Britain.” – Skipton
MoneyExpert commissioned a survey to gain more insight into the situation of first-time buyers in 2024:
- 22% of their respondents reported wanting to buy a home but being unable to save for a deposit,
- 14% of those who would like to buy a home don’t think they will ever be able to afford to
- 35% of respondents were saving for a deposit themselves, with 33% saving up with a partner or spouse
- 13% will be using inheritance money towards their first home, and 11% have been gifted all or part of the money from a family member
To put a long story short, becoming a first-time buyer is expensive, but why is this?
- High mortgage rates – according to Rightmove, as of 27th February 2025, the average UK mortgage rate was 4.87% for a two-year fixed term mortgage, and 4.69% for a five-year fixed-term mortgage
- Living costs – ‘cost of living’ is a phrase that I’m sure many of us are sick of, but it’s true that our living costs have soared in recent years due to inflationary pressures, with many of us feeling the squeeze
- The ‘rent trap’ – rent in the UK doesn’t exactly come cheap, and paying rent can massively eat into the amount that people are able to put away towards saving for their first home. According to an ONS provisional estimate, the average UK rent increased by 8.7% in the 12 months leading to January 2025
- House prices – UK house prices are increasing year-on-year, though the rate of this growth has started to slow
What Can I Do?
First, you should consider your own financial situation and goals. Is buying a property important to you? If buying a home is one of your financial goals, you should try to save regularly where possible and take advantage of government schemes like the Lifetime ISA.
Seek help from a regulated and qualified financial adviser and/or independent mortgage adviser if you are considering buying a home.