The Rising Cost of Homeownership: A Barrier for First-Time Buyers

The dream of homeownership is becoming increasingly out of reach for many Britons, particularly first-time buyers. According to recent analysis by property website Rightmove, the average first-time buyer mortgage payment has risen by a staggering 61% since 2019, from £667 to £1,075 per month.

Housing prices continue to rise

This increase is largely driven by the rise in house prices, which have jumped by nearly a fifth (19%) since 2019. In some regions, such as the north west of England, asking prices for first-time buyer homes have skyrocketed by a third (33%) over the past five years.

“As rates have increased over the last five years, the amount that a typical first-time buyer is paying each month on a mortgage has outstripped the pace of earning growth.” - Tim Bannister, Rightmove’s property expert

The situation is further exacerbated by rising mortgage rates. However, there is hope on the horizon, as the Bank of England base rate is expected to be cut in the near future, which could bring some relief to beleaguered first-time buyers.

Mortgage rates continue to rise

In the meantime, some first-time buyers are exploring alternative options, such as extending their mortgage terms to 30 or 35 years to lower monthly payments, or looking at cheaper homes for sale to reduce their borrowing needs.

“If mortgage rates reduce, this will help first-time buyers in the short-term more so than election housing promises.” - Tim Bannister

The findings come as voters are calling on the next government to prioritize housing policies, including building more affordable homes, tackling homelessness and rough sleeping, and reducing the number of empty homes.

Voters prioritize housing policies

Renters, in particular, are seeking measures to control rent rises in the private sector and improve their rights and protections. According to Richard Donnell, executive director at Zoopla, “People’s experiences and priorities vary based on their position in the market. Renters want more focus on their priorities including raising housing benefit levels and managing the pace of rental growth, while also improving rights and protections.”

As the housing market continues to evolve, one thing is clear: the next government must take bold action to address the challenges facing first-time buyers and the wider housing sector.

The housing market continues to evolve