UK Finance figures reveal that assisted first-time buyers’ average income stands at £56,015, with the average purchase price standing at £317,846.
The average deposit for this kind of first-time buyer was £118,073 and the average age was around 30 years old.
This compares to unassisted first-time buyers, who have an average higher income of £65,351 and a lower average purchase price of £279,281.
The average deposit was £60,741 and the average unassisted first-time buyer is older at just over 32 years old.
UK Finance said that looking at 2024, around two-thirds of homeowners were able to buy fully within their own finances.
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Around 30% did not access formal assistance like shared ownership or Right to Buy and, given the size of their deposit, were expected to have received family support.
The most popular government support schemes include shared ownership, which made up 6% of first-time buyer loans last year.
FTB numbers have ‘considerable fluctuation’
Looking deeper into the figures from 2017 until 2024 shows “considerable fluctuation” in first-time buyer numbers.
There was a particular spike during 2020 and 2021, which was attributed to the stamp duty holiday introduced during the pandemic.
The report noted that assisted first-time buyers during the period accounted for a “significantly higher share of total first-time buyer activity”.
“This suggests that there was an associated impetus for parents to boost their children’s finances in order to help them onto the housing ladder whilst the stamp duty saving was available. In other words, the tax measure may have provided more financial benefit to those who, by virtue of generous friends and family, already had access to a helping hand,” UK Finance explained.
Bank of Mum and Dad may use housing wealth rather than savings
The report stated that the assumption was that the Bank of Mum and Dad would be “well-off parents with substantial savings”, so the transfer of deposit is a simple move into children’s savings accounts.
It noted that while this may be the case for some, many households don’t have a massive savings pot and their largest store of wealth is their own property.
“The issue with this wealth store, however, is that it is not as simple to draw on as a savings account. Accessing housing wealth either involves a sale and trading down (which would seem excessive even for the most devoted of parents) or some form of mortgage equity withdrawal,” UK Finance said.
The report said there had been a “clear and significant increase” in the proportion of remortgage equity withdrawal for unspecified reasons, though this may be for a range of reasons.
However, looking at the amounts that are withdrawn, there was a broadly stable average of £70,000 since 2017, and this rose during the stamp duty holiday in 2020 to over £105,000 and stayed high until 2021, when it ended. The amounts withdrawn did then decrease and have remained lowered ever since.
From a regional perspective, in the North, where property prices are some of the cheapest, the average assisted first-time buyer purchase through this period was around £162,000 and the average equity withdrawn was some £60,000.
This compares to the average price paid by an assisted first-time buyer in London, which was £513,000, and the average money withdrawn was £176,000, but peaked at almost £250,000.
“Given this does not include money taken out for home improvement projects, there are relatively few other obvious uses for funds of this magnitude, particularly when the incidence was so widespread across the country. There is also a possibility that some of this equity withdrawal may also have been used to help fund other property purchases, including second homes and rental investments.
“Although it is not possible to establish a direct causal link, the exact alignment of the upwards movements in first-time buyer assistance and money withdrawn, as well as the sums involved, present a consistent narrative.
“Taken together, it is highly suggestive of this stamp duty holiday period having provided an additional incentive for parents to leverage their own housing equity in order to help their children with their own housing journey,” the report said.
Parental assistance could entrench social divisions
UK Finance said the role of parental assistance has been growing, and while a lot of first-time buyers were getting on the property ladder unassisted, they were older, bought smaller properties or the homeownership aspiration would “remain out of reach in the longer term”.
“At the individual level there is clearly a benefit from parents helping their children out in this way if they want to do so. However, taking a wider societal perspective, it may have the effect of entrenching social divisions, in relation to what is generally the most valuable asset that a household will own, assuming they achieve that ambition.
“Whatever the optimal societal outcome, housing supply remains in deficit compared to the growing demand, and whilst this continues, affordability will only ever get tighter over time.
“As such, we are likely to see parental help take an increasingly prominent role in first-time buyer activity. Our analysis here suggests that the potential for demand stimulus measures adding to this distortion should be considered, when evaluating housing policy proposals,” UK Finance concluded.
