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New UK Home Owners Can't Afford New Houses Despite 26% Drop

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By Brennan Forrest - - 5 Mins Read
English Homes.Row of Typical English Terraced Houses at London.
Photo | r.nagy/Shutterstock

Recent reports clearly state that first-time buyers in London spend 26% less than the national average in the UK housing market.

However, this seemingly favorable situation for newcomers should not mask the fact that most aspiring homeowners still face the fundamental issue of affordability.

It is important to note that despite this apparent advantage, purchasing a property in London is still a challenge for many.

According to a recent report by Zoopla, the average cost of a first-time property in the capital city stands at £399k.

While this may sound more manageable than the national average, which is around £140k higher, the struggle for many to step onto the property ladder persists.

Despite its discounted housing market for first-time buyers, London remains an expensive place for those attempting to make their initial property ownership.

Affordability Challenges Echo Nationwide

Nationwide highlighted a disturbing trend in its January fiscal year 2022/23 report.

Nearly half of first-time buyers found themselves in a position where external assistance was indispensable to raising a deposit.

This assistance often manifests through financial support from family or friends or through inheritance.

This starkly contrasts with the mid-1990s when only 27 percent of first-time buyers required such external financial aid.


Houses on a London street
A typical London street | Mirsadra Molaei/Unsplah


The financial landscape for first-time buyers has undergone a significant transformation, where the dream of homeownership has become increasingly dependent on external support systems.

The traditional narrative of saving diligently for a deposit is overshadowed by a new reality where familial or inherited financial support has become a crucial lifeline for aspiring homeowners.

Contradictions in House Price Trends

House prices, a key factor in the affordability equation, were anticipated to experience a two percent drop in the current year. However, contrary to these expectations, recent reports suggest a contrary trend.

According to Rightmove's latest reading, house prices registered a 0.9 percent increase in February, reaching an average of £362k.

This marginal but consistent price surge has raised concerns, particularly as residential properties continue to be approximately £40,000 more expensive than their pre-pandemic levels.

Although there has been a decrease in mortgage rates due to a cooling inflationary environment, they are still hovering around three percent higher than the average of 2.34 percent from December 2021.

This creates a complicated situation where potential buyers face a market that doesn't follow the expected cost reduction.

The relationship between house prices and mortgage rates is a crucial factor in the larger story of housing affordability, even outside the UK.

In its analysis, Zoopla points to potential relief for first-time buyers in 2024.

Recent falls in mortgage rates are projected to support this group, fostering an environment where reduced mortgage rates, earnings growth, and improved affordability converge to facilitate home purchases.

Izabella Lubowiecka, a senior property researcher at Zoopla, emphasizes the upcoming opportunities for first-time buyers, stating, "We expect more first-time buyers to come to market in 2024, particularly in the second half of the year."

Leveraging the Buyer Market

Despite the challenges, Lubowiecka encourages prospective buyers to be resourceful and explore alternative options.

In the current market, first-time homebuyers have an advantage and can explore various opportunities.

Experts recommend checking out different types of homes and considering other locations that offer more value for money. This change in approach could lead to a more sustainable and accessible housing market in the future.