First-time buyer market shrinks as affordability pressures bite

The share of first-time buyers purchasing homes in England and Wales has dropped sharply this year, as rising living costs and tighter affordability continue to weigh on the housing market.

According to home move comparison site reallymoving, first-time buyers made up 63.3% of all home movers in January, falling to 56.7% by August.

That’s a drop of 6.6 percentage points, or 10.4% overall.

Although the average purchase price for this group dropped by 3.1% to £271,784, the fall has done little to ease pressure on affordability.

Many would-be homeowners are still struggling to save deposits and secure mortgages that meet affordability tests.

FTB affordability issues

The firm’s founder and chief executive, Rob Houghton, said: “These figures highlight the scale of the challenge facing first-time buyers in 2025.

“Prices may be softening and mortgage rates inching down, but not nearly enough to offset the affordability pressures being felt in every region of the country.

“First-time buyers face trying to save for a deposit amid rising living costs and secure a mortgage at a sustainable repayment rate, with very little targeted government support to help them onto the ladder.”

He added: “Unless we start to see a dramatic increase in housebuilding, as has been promised, and targeted measures to boost affordability, first-time buyers are unlikely to regain their market share any time soon.”

Fewer first-time buyers

Every region of England and Wales has seen fewer first-time buyers this year, with the South West, Yorkshire and the Humber, East of England and the North East posting the steepest declines.

All of those regions were down by more than nine percentage points.

In the North East, prices paid by new buyers actually rose by 9%, while their overall share of transactions fell significantly, highlighting the continuing strain on budgets.

The East Midlands and London recorded the smallest reductions, but the capital still stands out with 68% of all movers now being first-time buyers.

High rents and family financial support are thought to be driving many Londoners to buy despite the cost.

The average property price for first-time purchasers in London slipped by 2.7%, from £454,800 in August 2024 to £442,443 in August 2025.

Most FTB’s opt for flats

The data also indicates a shift in the type of homes being purchased with the proportion of buyers opting for flats falling from 29.7% to 26.6%.

The share buying new builds dropped by nearly a quarter to 9.7%, the lowest level since 2016.

Concerns over cladding, ongoing service charges and the reduced number of completions have discouraged buyers from new developments.

A further blow came with the March reduction in the stamp duty threshold for first-time buyers, cut from £425,000 to £300,000, which has made entry-level buying less appealing.

Those able to afford higher prices appear increasingly likely to skip starter homes in favour of larger properties.