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UK first-time buyers with mortgages bought homes further out of London in 2023 compared with 10 years earlier, underlining the affordability challenges of getting on the housing ladder in the capital.
All local authorities in London, where the average house costs £549,000, registered a drop in first-time buyer mortgages per 1,000 dwellings between 2013 and 2023, the Office for National Statistics said on Tuesday.
In the same period, the number of first-time buyers per 1,000 dwellings increased in most local authorities in other nations and regions, including a rise in all areas of the North East of England.
The average property in the North East costs £161,389, according to the latest official data. The current national average cost is £268,000.
The ONS said the rate of first-time buyer mortgage sales had “been falling in London” but had “risen in more rural areas”, adding: “First-time mortgage buyers bought homes further from the capital compared with 10 years earlier.”
Simon Gerrard, chair of Martyn Gerrard, an estate agency in London, said “decades of insufficient [housing] supply coming to market” and strong population growth in London had forced people getting on the property ladder further out of the capital.
“The average first home now costs more than 10 times the average salary in parts of London, pulling up the housing ladder for many and driving up the age at which the fortunate few can actually make a purchase,” he said, adding that stamp duty changes from April would “only make a dire situation worse”.
A similar trend of first-time buyers being pushed further out of urban centres over the past decade was seen in other big cities in the UK, such as Birmingham and Manchester, where rates of mortgage sales fell or rose more slowly than in surrounding areas, according to analysis of the statistics agency’s figures by the Financial Conduct Authority.
Tom Bill, head of UK residential research at property group Knight Frank, said affordability pressures meant “first-time buyers have increasingly looked beyond urban centres to get more bang for their buck”.
Higher mortgage rates and the Covid-19 pandemic, which triggered a “race for space” among homeowners, had accelerated the trend, leaving “younger people more willing to look at formerly overlooked locations and stretch the geographical definitions of a commuter belt”, he added.
In 2023, the three local authority areas with the highest rates of first-time buyer mortgage sales were Dartford in the South East, Harlow in the East of England and Nuneaton and Bedworth in the West Midlands.
Respectively they registered 20.2 first-time buyer mortgage sales per 1,000 dwelling, 16.3 sales per 1,000 and 15.5 sales per 1,000. By contrast, in 2013 the top three areas for first-time buyers were all in London.
Although mortgage rates have eased from peaks reached in summer 2023, Richard Donnell, executive director at property portal Zoopla, said people joining the property ladder were still struggling “where the cost of buying a home is the greatest, increasing the need for a larger deposit”.
While less than 25 per cent of all residential property sales between 2006 and 2008 involved first-time buyers with mortgages, the share rose to 38.4 per cent in 2023, the highest since data collection began in 2006.
This month the ONS said the share of mortgage lending to first-time purchasers hit a record high at the end of last year, as buying property became cheaper than renting and more landlords left the market.
Data visualisation by Clara Murray