First-time buyers are facing increasing challenges in the housing market, with mortgage costs up 7.3% year-on-year and only a third of properties currently listed for sale within their price range, according to new research from mortgage adviser Alexander Hall.
The study found that the average first-time buyer property price in Great Britain now stands at £244,519. With a 15% deposit of £36,678, the typical first-time buyer requires a mortgage of £207,841.
However, rising borrowing costs mean the average interest rate for first-time buyers has increased from 4.38% a year ago to 4.57% today, pushing up average monthly repayments to £1,164—an increase of £79 per month.
COMPETITION FOR AFFORDABLE HOMES
Beyond rising mortgage costs, the research highlights another challenge: limited availability of affordable homes. Of the 436,839 properties currently listed for sale across Britain, only 34% are priced at or below the average first-time buyer purchase price.
Regional disparities are evident, with the West Midlands having the lowest proportion of affordable listings. Just 27% of homes for sale in the region are priced at or below the average first-time buyer house price of £214,955. Other regions with lower-than-average affordability include Yorkshire and the Humber (31%), Scotland (31%), Wales (32%), and the South West (32%).
London remains the most expensive area for first-time buyers, with an average purchase price of £444,548. However, affordability pressures are more pronounced elsewhere, with more properties available within budget in the capital than in some other regions.
In contrast, the North East has the highest proportion of properties within reach of first-time buyers, with 37% of current listings priced at or below the regional average of £146,393.
FUTURE OUTLOOK AND MARKET PRESSURES
Stephanie Daley, director of partnerships at Alexander Hall, noted that first-time buyers are facing a significantly tougher market than previous generations.
She said: “Getting that first foot on the property ladder is no easy feat, and today’s first-time buyers are facing a considerably tougher task than their predecessors, with the average price paid by a first-time buyer having increased by 52% over the last decade alone.”
AFFORDABILITY ISSUES
Higher purchase prices mean buyers must secure larger deposits, while rising mortgage rates have driven up monthly repayments. Daley added that the biggest challenge remains affordability, with only around a third of listed properties realistically within reach of first-time buyers.
Despite these difficulties, the outlook for borrowing costs may improve. “We’ve already seen the Bank of England reduce interest rates this year, and with more cuts expected to come, first-time buyers should start to benefit from easing mortgage rates,” Daley said.
