Despite the challenging combination of record high house prices and uncertainty caused by last year’s third lockdown, 2021 saw 408,379 first-time buyer transactions.
The last time the UK experienced a first-time buyer peak of this significance was in 2002 when 531,800 took their first step on the property ladder.
According to Yorkshire Building Society, which has analysed data from UK Finance, a combination of falling unemployment, low mortgage borrowing costs and an increased number of low deposit mortgage deals available were the main factors driving the demand for homeownership from new buyers.
And it comes despite the fact the typical first-time buyer home has increased by 9% to £222,997 in the year to October 2021, up from £204,230 a year earlier.
Yorkshire Building Society said the stamp duty holiday would have helped those buyers purchasing homes in high value areas such as London and the South East.
Whilst, first-timers already benefited from stamp duty relief on the first £300,000 of the purchase price, the additional relief on the value between £300,000 and £500,000 would have led to savings and reduced borrowing for those buying more expensive properties.
Lockdown savings
Yorkshire also believed many would-be homeowners had been able to save more money during the lockdowns which would helped to boost their deposits.
The proportion of households’ disposable income saved nationally rose from 7% in 2019 to 27% in the spring months of 2020, which was the highest since records began in 1963 by some margin, said the building society.
The English Housing Survey (EHS) suggests first-time buyers are typically in the high-income groups whose finances may have benefitted in this way from the Covid restrictions. According to EHS, over 60% of first-time buyers were in the top 40% of the income distribution, where survey data from the Bank of England shows that the improvement in household finances had been greatest.
Nitesh Patel, strategic economist at Yorkshire Building Society, said: “The performance of the first-timed 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 re-opening in April.”
He added: “In the near-term housing demand will continue to exceed supply, however with prices at an elevated level in comparison to local earnings, this should dampen activity. Therefore, it’s unlikely that we will continue to see first-time buyer numbers at this level in 2022 and beyond.”
UK first-time buyer house purchase mortgage loans 2006-2021
| Year | Number of first-time buyers | Year-on-year change (%) | FTB Share of all mortgage house purchases (%) |
| 2006 | 400,900 | 10% | 37% |
| 2007 | 357,600 | -11% | 36% |
| 2008 | 191,000 | -47% | 38% |
| 2009 | 193,900 | 2% | 39% |
| 2010 | 193,600 | 0% | 38% |
| 2011 | 188,000 | -3% | 39% |
| 2012 | 211,900 | 13% | 41% |
| 2013 | 258,200 | 22% | 45% |
| 2014 | 310,300 | 20% | 47% |
| 2015 | 298,100 | -4% | 47% |
| 2016 | 328,500 | 10% | 49% |
| 2017 | 345,900 | 5% | 50% |
| 2018 | 353,100 | 2% | 51% |
| 2019 | 351,300 | -1% | 51% |
| 2020 | 303,000 | -14% | 50% |
| 2021 | 408,379 | 135% | 50% |
Source: UK Finance, 2021 estimated by Yorkshire Building Society
