Improving affordability helped to support a rebound in first-time buyer activity during 2025 although significant disparities persist by region and occupation, according to Nationwide’s latest Housing Affordability Report.
The building society said affordability constraints eased over the year as house price growth remained well below earnings growth and mortgage rates continued to edge lower.
This combination helped underpin demand among first-time buyers, who accounted for a higher-than-average share of house purchase activity.
Nationwide’s benchmark measure shows that a buyer earning the average UK income and purchasing a typical first-time buyer property with a 20% deposit would face monthly mortgage payments equivalent to 32% of take-home pay. While slightly above the long-run average of 30%, this is well below the peak of 48% recorded in 1989.
IMPROVED AFFORDABILITY
Affordability has also improved when measured against earnings. The first-time buyer house price to earnings ratio fell to 4.7, slightly below its 20-year average, continuing a gradual improvement seen in recent years.
Despite these gains, the challenge of raising a deposit remains a major barrier. A 10% deposit on a typical UK first-time buyer home is now around £23,000.
Saving 10% of average net pay would take nearly six years, with stark regional differences.
In London, a buyer would typically need around nine years to save a deposit, compared with around four years in the North.
EASIER CREDIT CONDITIONS
Andrew Harvey (main picture, inset), Nationwide’s senior economist, said: “With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased somewhat over the past year, helping to underpin buyer demand.”
First-time buyer activity was around 20% higher than in 2024.
He added that first-time buyer activity was around 20% higher than in 2024, supported by easier credit conditions.
“The share of high loan-to-value lending… reached its highest level for over a decade,” he said.
However, Harvey cautioned that saving for a deposit remains particularly difficult for renters.
He added: “This suggests it is a little easier for prospective buyers to save for a deposit, although it is still particularly challenging for those in the private rented sector, given rental increases in recent years.”
FAMILY SUPORT
As a result, family support remains crucial. Nationwide estimates that more than a third of first-time buyers in 2024–25 received help from friends or family, either through gifts, loans or inheritance.
The report also highlights wide variation in affordability by occupation.
Mortgage payments relative to take-home pay are lowest for those in managerial and professional roles, while affordability is most stretched for people working in sales and customer service or in so-called elementary occupations, where payments would absorb around half of average take-home pay.
Affordability is most strained in London and the South of England.
Regionally, affordability is most strained in London and the South of England, despite some improvement in the capital.
Meanwhile the North, Yorkshire and the Humber and Scotland remain the most affordable parts of the UK.
Harvey said: “We expect housing market activity to strengthen a little further as affordability continues to improve gradually via income growth outpacing house price growth and a further modest decline in interest rates.”
MARKET LIFEBLOOD
Enzo Mora, CEO and founder of The Mortgage Brain, said: “First time buyers have always been the lifeblood of the property market so it’s encouraging to see affordability and opportunities improving.
“Many of those paying high rents or trying to save for a deposit can now fast track the buying process and we continue to work with lenders and house builders to connect first time buyers to the vast number of products and incentives available.
“We also need the new Planning and Infrastructure Act to start bearing fruit as soon as possible to increase the supply of new homes to improve mobility and affordability across the board.”
OUT OF REACH
Nathan Emerson, CEO of Propertymark, added: “While it’s encouraging to see affordability improving and first-time buyer activity picking up, this report underlines that homeownership remains out of reach for many, particularly those on lower and middle incomes.
“The fact that a typical first-time buyer still needs close to six years to save for a 10% deposit shows just how significant the deposit barrier remains, especially in London and the South of England.
“Regional and occupational disparities continue to shape who can realistically buy a home. Too many buyers are still reliant on financial help from family and friends, and this risks entrenching inequalities between those with access to support and those without.”
JOINED-UP APPROACH
And he added: “To sustain and broaden access to homeownership, we need a joined-up approach that includes boosting housing supply, particularly of genuinely affordable homes, alongside targeted support for first-time buyers.
“Improving affordability is a step in the right direction, but it must translate into fairer access to housing across all regions and professions.”
