Buying your first home is supposed to be one of those moments in life that you never forget, such as getting married and reading FT Adviser for the first time, but that life joy has become increasingly difficult for younger people.
Back at the end of 2023, the Financial Times reported that the number of UK first-time buyers getting on the housing ladder hit a 10-year low, with the number of mortgages to first-time buyers falling below 300,000.
These statistics also found that the housing market is favouring one kind of younger buyer in particular, those with family connections, with 60 per cent of young people purchasing their home in 2023 funding their purchase through the bank of mum and dad.
This represented a significant increase on 2022, which saw parents fund below 50 per cent of first-time buyers and demonstrates how those funding their own homeownership are struggling in the current market.
While this is an issue that is having its impact felt across the world, it is not felt equally in every country, as Financial Times data found that homeownership among 25 to 34-year-olds had collapsed significantly in the UK, falling by 22 per cent since 1990.
This is in contrast to countries such as Germany, which saw homeownership among younger buyers fall by 8 per cent; the US, which saw rates fall by 6 per cent; and France, which fell by 3 per cent.
These conditions have led to a recent report from the Building Societies Association to describe the UK’s housing market as “broken” and to call for “significant changes” to fix it, specifically identifying the problems felt by first-time buyers as a catalyst for this.
As a potential first-time buyer, it is encouraging to see this plight being given attention and thought by an association such as the BSA as I have long felt overwhelmed by the difficulty this issue has posed.
However, it is worth underlining the importance this issue will have on the rest of the housing market.
It can be easy to forget that the impact of this issue is not just confined to those seeking to get on the property ladder but will have a ripple effect across the whole market if not addressed properly.
The inability for first-time buyers to get their foot on the property ladder could leave the whole market facing one problem in particular: stagnation.
Without an effective way to stimulate first-time buyers, those fortunate enough to purchase their first home may be unable to sell and move on to bigger and better things.
It is only natural for your first home not to be the house of your dreams, but with no one to sell it to, buyers may become trapped in less than ideal living conditions with no way out.
I’m sure it can be quite easy to dismiss the worries of first-time buyers by those who already have a firm foothold on the property ladder as there is no direct effect on them, but it is important to reiterate that this issue will impact the whole market.
