Prospective homeowners across the UK have received a modest boost, with easing affordability constraints leading to a notable rise in first-time buyer activity over the past year. However, a profound regional divide means those in London and on lower incomes continue to face significant barriers to entering the property market.
The National Picture: A Welcome Uptick
A combination of declining mortgage rates and wage growth outpacing house price inflation has slightly improved the financial landscape for new buyers. This has bolstered demand, particularly among those taking their first step onto the housing ladder.
According to the latest housing affordability report from Nationwide, first-time buyer activity jumped above its long-term average last year. The level was approximately 20 per cent higher than in 2024.
This surge was supported by easier access to credit and a rise in high loan-to-value lending, where deposits of 15 per cent or less are required. This type of lending reached its highest level in over a decade.
Andrew Harvey, Nationwide’s senior economist, provided a key benchmark: "A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20 per cent deposit would have a monthly mortgage payment equivalent to 32 per cent of their take-home pay." He noted this is slightly above the long-run average of 30 per cent but well below the peak of 48 per cent recorded in 1989.
The Stark Regional Divide
While the national trend is positive, the experience varies dramatically depending on location. On average, saving a 10 per cent deposit for a typical starter home—around £23,000—takes nearly six years. This masks a huge geographical disparity.
Londoners face the steepest challenge. In the capital, a 10 per cent deposit averages a staggering £44,800, compared to just £13,100 in the North. Consequently, a prospective buyer in London must save for around nine years, while someone in the North could manage it in just three.
Harvey highlighted that this divide forces "a significant proportion of first-time buyers" to seek financial help from friends and family. Last year, over a third relied on gifts, loans, or inheritance to raise their deposit.
Nathan Emerson, chief executive of Propertymark, echoed this concern: "The fact that a typical first-time buyer still needs close to six years to save for a 10 per cent deposit shows just how significant the deposit barrier remains, especially in London and the South of England." He warned that reliance on the 'Bank of Mum and Dad' risks entrenching inequality.
Occupational Hurdles and Silver Linings
Affordability is not just a postcode lottery; it also varies sharply by profession. Workers in sales, customer service, construction, manufacturing, and courier roles find it most challenging. For these groups, typical mortgage payments could swallow around 50 per cent of their average take-home pay.
"The differences in affordability reflect the divergence in earnings by occupational group," Harvey explained. For instance, managers and senior officials typically earn around double the annual income of those in administrative roles.
Despite these persistent gaps, there was a silver lining for all workers over the last twelve months. Every occupational group saw an improvement in affordability, with those in leisure and care sectors experiencing the highest earnings growth.
While the London market remains the least affordable in the UK, it did record the largest improvement in affordability recently, due to weaker house price growth and lower interest rates. Meanwhile, regions like the North, Yorkshire, and Scotland became steadily less expensive relative to incomes.
