As many as 2.2 million would-be first-time buyers have failed to get on the property ladder since the financial crisis, according to analysis by the Building Societies Association (BSA).
Analysis of historic first-time buyer data showed around 7.2 million individuals or couples would have been expected to buy their first home since 2006.
However, only five million achieved this, leading the BSA to reason there are 2.2 million missing first-time buyers from the property market.
This new analysis has been published as an update to the BSA’s’ First-time buyers: age old problems, modern solutions report’ released last year.
It highlighted the scale of the challenges facing first-time buyers revealing how those who are successful in getting onto the property ladder have either had help from parents or have two incomes which are higher than average.
In fact the BSA said first-time buyers are facing a double affordability challenge – an almost record-high cost of buying a home combined with the end of record-low mortgage rates. As a result, repayments as a proportion of income for new first-time buyers have increased by around 30% (22% of income) since its low in 2020 (18% of income).
Even though mortgage rates have begun to ease the BSA has found first-time buyers still feel mortgage affordability is their biggest hurdle and many must stretch their finances to get onto the property ladder.
The latest research has now uncovered the ‘missing millions’ – or those people who, following the financial crisis in 2008, have missed out on getting onto the property ladder.
The BSA said during the immediate aftermath of the financial crisis the missing buyers were broadly split across all age groups, but in more recent years they have tended to be those in the younger bracket – particularly those under 30.
Initiatives aimed at increasing first-time buyer numbers in the future will therefore need to target both younger borrowers, it said. But they must also support those who missed getting on the property ladder at a younger age and failed to catch up at a later age.
The biggest challenge to increasing first-time buyer numbers is enabling younger and lower income borrowers to have an opportunity to buy their own home.
Paul Broadhead, head of mortgage and housing policy at the BSA said: “I’m disappointed that 12 months on from our first report, which highlighted the struggles faced by first-time buyers and the potential roadmap for change, the barriers to homeownership remain the same today.
“It’s shocking that 2.2 million first-time buyers who would have reasonably expected to buy their own home have failed to do so since the financial crisis. And every day that passes without real action the number of potential lifetime renters is growing.
“We know that there is no single solution for all first-time buyers, and not all aspiring homeowners will be able to achieve their dream whilst the double affordability challenge of the high cost of buying and high cost of owning a home remains.
“However, our report outlines several tangible actions that can be implemented to help fix the broken housing market and to support the next generation of homeowners.”
The BSA thinks a long-term strategy needs to be implemented by the government to support first-time buyers now and in the future.
It should focus on making homes more affordable, available and appropriate to the needs of those living in them.
It’s not just more homes which are needed, the BSA said lending rules had become too strict and there should be more flexibility to support first-time buyers. This could include the availability of 95% loan-to-value mortgages and lower income requirements.
