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The changing profile of first-time buyers

The age of first-time buyers has shifted up the scale over the past twenty years, according to the most recent English Housing Survey. While the average age only crept up two years, to 32, a larger change has occurred in the share of different age groups. The proportion of first-time buyers between ages 16-24 has plummeted from 21.3% to 7.5%, while 35-44 year olds now make up 20.9% of the first-time buyer population, up from 16%.

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A number of factors are driving these changes. It could be in part due to more people going to university and leaving with significant student debt. Real income growth has been weak. Of course, house price growth in some regions has also rapidly outpaced the increase in average incomes. Taken together, many people must wait until they are older before they buy their first home.

Looking at incomes is also instructive. How much you earn is unsurprisingly a determining factor in who can become a homeowner. More concerning is that homeowners are again becoming concentrated in higher income groups. The data shows that two thirds of first-time buyers were in the two highest income bands in 2015/16. This figure dropped from 62% to 58% between 1995/96 and 2005/06 but shot back up over the last ten years. 

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Ever more important for those aspiring to get onto the housing ladder is the need to find a soulmate. In 2015/16, three quarters (74%) of first time buyers were couple households, a marked change since 2005/06 (66%). Not good news for all the singletons out there – especially for women who make up less than a third of single first-time buyers.  

Elsewhere the data shows the 'Bank of Mum and Dad' gaining in influence – though perhaps not in the magnitude that various housing market commentators have argued. 29% of people had help with the deposit from family and friends – compared to 22% twenty years ago.

While the desire to own a home remains strong in renters, raising a deposit is still the biggest barrier. The Survey asks people who report they had been considering applying for a mortgage why they did not do so. Almost half said they didn't think they had a big enough deposit – far and away the most cited reason, which accords with the findings of the BSA's quarterly Property Tracker survey.

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There we have it – first-time buyers are now older, earn more, and are more likely to be in a couple, but many are still reliant on help from their loved ones. The past decade has seen significant Government support for homeownership – not least in policies such as Help to Buy. Without that support, these trends may well have become even more conspicuous. Now with the Government focusing on supply and widening out its support to a range of tenures through the Housing White Paper, we will see what effect these measures have on the profile of first-time buyers in coming years.

Posted by Charlie Blagbrough on 31 July 2017