The number of people buying their first home almost doubled in 2021 – and the price they paid fell by £12,600 despite the housing boom, according to new research.
First-time buyer numbers were up by 98 per cent last year compared to 2020, according to Barclays’ first time buyer index.
They paid an average of £281,900 for their homes, a drop from the average price of £294,500 paid in 2020.
However, it represented a rise from pre-pandemic levels recorded in 2019, when first-time buyers typically spent £249,700 to get on the property ladder.
First-time buyer numbers almost doubled last year, as the typical price paid reduced by £13k
The £281,900 figure is still more than the average house price in the UK, which according to Land Registry data was £275,000 in December 2021.
The reduction may have been down to the price of a flat not growing as quickly as other property types, as many buyers found them less appealing during periods of lockdown when they wanted more space.
Although the average property price rose by 10.8 per cent in the year to December, according to the latest ONS figures, detached houses were up 15.3 per cent on average whilst flats were only up by 5.3 per cent.
Barclays’ data also showed that the average income of a solo first time buyer increased significantly from £45,900 in 2019 to £50,300 in 2020, and to £50,800 in 2021.
The average total income of joint first-time buyers fell slightly from £72,200 in 2020 to £70,500 in 2021. However, this was substantially more than the £63,800 they typically earned in 2019.
House prices are becoming increasingly out of kilter with wages. According to Nationwide, the house price to earnings ratio stood at 5.9 in early 2020 compared to the pre-financial crisis record of 6.4 in 2007.
In autumn 2021, the house price to earnings ratio surpassed that to reach 6.6.
House prices are at a record high compared to wages, surpassing the 2007 pre-crisis peak
Barclays’ data shows the average deposit paid by a solo first time buyer in 2021 was £61,100 – more than a year’s salary – but this figure fell significantly from £71,400 in 2020.
For joint buyers, the average deposit was £61,000 in 2021, which decreased slightly from £63,800 in 2020.
Survey respondents cited the struggle to save for a deposit as the single biggest obstacle to home ownership, and over half of those surveyed (56 per cent) said they wouldn’t have been able to get on the property ladder without family support.
However, personal savings were still the primary method of saving for a deposit, with 62 per cent of those surveyed saying this made up the bulk of their down payment.
The average age for a first-time buyer to complete their home purchase was 32
The average first time buyer started saving at the age of 24, and the average age at completion was 32, which has remained static for the past three years.
Almost three quarters of those surveyed said that they wished they had started saving for their deposit sooner.
And nearly two thirds of those looking to buy their first home believed they would never get on the property ladder.
Claire Macphail, mortgage expert at Barclays, said: ‘It’s encouraging to see that first time buyers have been able to get onto the property ladder in increasing numbers since the start of the pandemic.
‘However, despite numbers nearly doubling across the last year, it’s worrying to hear that many still believe that they’ll never be able to afford their first property.’
The research also revealed a lack of knowledge about the process of buying a home and the costs involved.
More than half of budding or existing first time buyers said they don’t know how to go about the process of buying their first property.
Some 39 per cent said they didn’t know they would need to factor in solicitors’ fees, while 54 per cent were unaware that they might need to pay stamp duty, if not exempt.
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