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

The dream of owning a home has become increasingly elusive for many first-time buyers in the UK. According to recent calculations by Rightmove, the average first-time buyer mortgage payment has risen by a staggering 61% since the last General Election year of 2019, from £667 to £1,075 per month.

Average house prices have jumped by nearly a fifth (19%) since 2019.

The reasons behind this significant increase are multifaceted. One key factor is the rise in house prices across Britain. First-time buyers now face paying £227,757 for a home, a whopping 19% more than in 2019. Regionally, the north west of England has seen the largest surge in house prices, with a 33% increase since 2019, while London has seen the smallest percentage rise of just 6% over the past five years.

London house prices are typically higher than elsewhere in Britain, with the average price tag on a first-time buyer property standing at over half a million pounds.

Another significant contributor to the rising mortgage costs is the increase in mortgage rates. As rates have risen 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.

“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.

In response to these rising costs, some first-time buyers are exploring alternative strategies to make homeownership more affordable. This includes extending mortgage terms to 30 or 35 years to lower monthly payments or looking at cheaper homes for sale to reduce the amount borrowed.

Mortgage rates have increased significantly over the past five years, adding to the financial burden on first-time buyers.

The findings come as Zoopla’s research highlights the top housing priorities for the next government, with building more affordable homes, tackling homelessness and rough sleeping, and reducing the number of empty homes topping the list.

Building more affordable homes is a top priority for the next government, according to Zoopla’s research.

Rounding out the top five priorities are helping first-time buyers onto the property ladder and controlling rent rises in the private sector. As the UK government prepares for the next election, it remains to be seen how these housing priorities will be addressed and what measures will be taken to make homeownership more accessible to all.