The number of first-time buyers reached its lowest level for a decade last year, research from Yorkshire Building Society reveals.

At 290,000, there will be 21% fewer first-time buyers in 2023 than in 2022, the lowest number since 2013. But while total purchase activity across the market was down 30% the ratio of first-time buyers remained strong at over half (54%) of overall new house purchase activity in 2023, up from 41% a decade ago.

But the fall is less than the 30% drop in overall purchaser numbers, says the Yorkshire Building Society

The fall in first-time buyer numbers follows the 20-year high of more than 400,000 in 2021, which was fuelled by government initiatives including stamp duty incentives, changing working habits and low borrowing costs post-pandemic.

Ben Merritt, the Society’s Director of Mortgages, says: “First-time buyers are the lifeblood of the market and are still clearly keen to buy.

“There is no doubt their aspirations are being hampered by the multiple factors at play, which have resulted in the market contracting by up to 30% this year, but still their numbers have only dropped by 21%.

“This demonstrates a positive ‘can-do’ sentiment with first-time buyers cutting their cloth in order to get on the housing ladder.”

INDUSTRY ACTION

But he adds: “Wider industry action is needed to support first-time buyers. After all, the wider market relies on them, not least to support purchases higher up the chain.”

Max Shepherd, Yorkshire Building Society Group Economist, says: “Current market expectations suggest several rate cuts in 2024, which would ease mortgage rates in the first half of the year.

“However, this isn’t all good news, as interest rates falling in this way reflects the poor health of the economy overall, which could mean low growth and higher unemployment, which would only increase the urgency around ensuring a concerted approach to supporting first-time buyers.”