First time buyers UK: average house prices and the most affordable areas to live, according to Halifax data

The number of first time buyers getting onto the housing ladder remained close to record levels in 2022, although most had to cohabit to get a mortgage, Halifax research published on Wednesday (25 January) has found.

This came about despite house prices hitting record levels in the summer and the turmoil seen in the property market in the wake of the Liz Truss premiership. Mortgages soared from late September onwards after Truss and her Chancellor Kwasi Kwarteng pledged to introduce a swathe of unfunded tax cuts and public spending.

However, the picture could be set to change in 2023 as the average price of first time buyer homes has continued to rise above the rate of inflation. Meanwhile recent research by fellow lender Nationwide found mortgages and deposits have become increasingly unaffordable as wages are failing to keep pace with house price growth.

A broader downturn is expected in the UK property market as a result of the continuation of the worst cost of living crisis in decades, the likelihood of a recession, and high mortgage costs. House prices are already falling back as buyer sentiment cools.

So, what does Halifax’s latest research into the state of the first time buyers market tell us - and which areas offer the best hope for those seeking to get onto the first rung of the property ladder?

What did Halifax’s first time buyer research reveal?

Halifax, which is one of the UK’s biggest mortgage lenders, analysed its own mortgage data as well as other data from banking industry body UK Finance and the Office for National Statistics (ONS) to show how first-time buyers are faring in the housing market.

While its research showed 2022 was a near-record year in terms of the number of first time buyers getting onto the housing ladder, it also found that the majority of these buyers were having to cohabit and were older than ever.

Between January and November 2022, there were 362,461 first-time buyers in the UK. This figure is the third highest Halifax has ever recorded, but marked an 11% drop on 2021 when the stamp duty holiday and pent up demand caused by the Covid-19 pandemic led to a surge in housing market activity.

However, this number could be set to fall away over the coming year after Halifax revealed the average cost of a typical first-time buyer home has risen 13% year-on-year to just over £300,000, with the average deposit required climbing to 21% of the purchase price - an 8% hike on a year previously.

It means the average deposit is now £62,470. At the same time, average property prices are around 7.6 times the size of the average UK salary.

Despite these challenges, Halifax reported that first-time buyers make up 52% of all mortgages being granted. Part of the reason why they made up the majority of purchases appears to be down to an increasing trend of cohabiting - 63% of mortgage completions were in the names of two or more people.

First-time buyers have also had to wait for longer to get on the first rung of the property ladder. The average age of a first time buyer in the UK has climbed to 32 from 30-years-old over the past decade, with the average sitting at 33 for those seeking to buy in London and the South East.

Where are the most affordable house prices?

According to the same Halifax research, Scotland is where first time buyers may experience more joy when it comes to the affordability of housing. Six out of the 10 most affordable local authority districts were found in the country.

Here are the top-10 places in the UK that Halifax found to be the most affordable, and how average house prices stack up against average earnings in each area:

1. West Dunbartonshire (includes Dumbarton): 2.7
2. Inverclyde (includes Greenock): 2.8
3. North Ayrshire (includes Largs): 2.9
4. Copeland (includes Whitehaven): 3
5. East Ayrshire (includes Kilmarnock): 3
6. Hyndburn (includes Accrington): 3.1
7. South Ayrshire (includes Ayr): 3.1
8. Clackmannanshire (includes Alloa): 3.1
9. Barrow-in-Furness: 3.2
10. Blaenau Gwent (includes Ebbw Vale): 3.2

The majority of the top-10 least affordable areas in which to buy a home were found in London. Eight out of the 10 most unaffordable local authorities were boroughs in the UK capital. Here is the full list:

1. Westminster: 10
2. Camden: 10
3. Hertsmere (includes Borehamwood and Bushey): 9.6
4. Hammersmith and Fulham: 9.3
5. Harrow: 9.2
6. Barnet: 9
7. Brent: 8.9
8. Islington: 8.6
9. Haringey: 8.4
10. Oxford: 8.4