Between 1982 and 2022, the average number of first-time buyers in England entering the market each year was 340,000. Last year, this fell to 315,000 and is forecast to remain below that level for the next five years. The result is that 426,000 fewer first-time buyers will enter the market up to 2027 than if the long-term average of entrants had prevailed.

Over the last 40 years, tougher deposit and affordability pressures have made it increasingly difficult to get on the property ladder, according to a report by Leeds Building Society in partnership with WPI Strategy.

Compared to 1982, house prices paid by first-time buyers in 2022 were 16 times higher whereas earnings before tax were just seven times higher. That means today’s buyers must spend almost five times their earnings on a house, compared to just twice their salary in the early 1980s.

Average deposit requirements rose from 25% of a first-time buyer’s average earnings, equating to a deposit of £2,100, compared to 115% of earnings today. This is equal to a deposit of £68,700. Meanwhile, the time to save for a home has risen from 2.5 years to 12 years.

Leeds BS: Call to action for first-time buyers

Richard Fearon, chief executive of Leeds Building Society, said: “More than a decade of low interest rates have papered over the cracks in the housing market. It has masked a growing gap between people with the ability, or family help, to build ever higher deposits and stretch their repayments and those who cannot. If left unaddressed the gap will become a chasm – in the next five years, the number of aspiring homeowners priced out of the market could be enough to fill a city bigger than Coventry.”

Leeds Building Society is calling for three actions to be taken to improve the market for new buyers:

• Building more homes of all types: A major acceleration of current efforts and policy changes including the restoration of mandatory housing targets and the introduction of targets for affordable housing in local authorities including reform of the planning system.
• Increasing affordable routes to home ownership: With renters’ reform to provide greater protection for those saving for a deposit, and increased access to ownership through affordable schemes such as shared ownership.
• Supporting people to save for their deposit: Reform to the Lifetime ISA scheme to reflect house price increases and new measures to allow people to build and improve credit scores by including rent payments.

“We risk creating a lost generation of first-time buyers – a terrible scar on the face of a country that prides itself on people’s ability to own a home, create roots in their communities, and prosper as a result,” said Fearon. “We need to develop a long-term plan before things get even worse: building more homes of all types, increasing affordable routes to home ownership and supporting people to save for their deposit.”