Buying a first home is a dream for many people, but for first-time buyers in the UK, it has become more difficult than ever. House prices are high, mortgage rates have increased, and saving for a deposit is a challenge. Many young buyers feel stuck, unable to take their first step onto the property ladder. Estate agents in Brighton are also witnessing these challenges, as local buyers face similar hurdles in entering the property market.
So, why is the housing market so tough for first-time buyers? Let’s take a closer look at the main challenges they are facing today.
High House Prices
One of the biggest problems for first-time buyers is the cost of homes. Over the last decade, house prices have risen much faster than wages. This means that even with a good salary, many people struggle to afford a home in their preferred area.
For example, in some parts of the UK, especially London and the South East, the average house price is over 10 times the average salary. This makes it almost impossible for many first-time buyers to purchase a home without a very large deposit or financial help from family.
Rising Mortgage Rates
A mortgage is the loan most people need to buy a house. In the past, interest rates were very low, making mortgages more affordable. However, over the last year, interest rates have increased, making monthly repayments much higher.
For first-time buyers, this means they may struggle to borrow enough money to afford a home. Even if they do get a mortgage, the higher repayments can put pressure on their finances.
Difficulty Saving for a Deposit
To buy a house, buyers need to pay a deposit, which is usually at least 5-10% of the property price. For example, if a home costs £250,000, a 10% deposit would be £25,000.
Saving this amount of money is hard, especially when rent, energy bills, and food costs have all gone up. Many first-time buyers feel stuck in a cycle—paying high rent makes it difficult to save, and without savings, they can’t buy a home.
High Cost of Living
The cost of everyday living has risen sharply. Bills, groceries, transport, and rent are all much more expensive than they were a few years ago. Because of this, people have less money left at the end of the month to put towards a house deposit.
Even those who have savings may find that their money doesn’t go as far as it once did. With house prices rising, the amount needed for a deposit also increases, making it feel like a never-ending challenge.
Competition from Investors
Another issue for first-time buyers is competition from property investors. Many buy-to-let landlords and cash buyers purchase properties, sometimes paying more than the asking price.
Sellers often prefer to sell to cash buyers because the process is quicker and there’s no risk of a mortgage application being rejected. This makes it even harder for first-time buyers to secure a home.
Stricter Mortgage Rules
Getting a mortgage is not just about having a deposit; lenders also check if buyers can afford the repayments. Due to high interest rates, lenders have become stricter with their checks.
Buyers need a stable income, a good credit score, and proof that they can afford the mortgage even if rates go up again. Some people who could have got a mortgage a few years ago are now being rejected or offered smaller loans.
Fewer Affordable Homes Available
There is a shortage of affordable homes for first-time buyers. Many new-build houses are expensive, and older, cheaper properties are often snapped up by investors. This means there are fewer suitable homes available at prices first-time buyers can afford.
What Can First-Time Buyers Do?
Despite these challenges, there are ways for first-time buyers to improve their chances of getting on the property ladder:
- Use Government Schemes– There are help-to-buy schemes and first-time buyer incentives, such as Shared Ownership and First Homes Scheme, which make buying more affordable.
- Consider Cheaper Locations– Looking at homes in areas with lower prices, even if it means commuting further, can make buying a home more possible.
- Improve Credit Score– A good credit score can help secure a better mortgage deal. Paying bills on time and reducing debts can improve credit ratings.
- Increase Savings– Setting up a Lifetime ISA (LISA) allows buyers to save for a deposit with a 25% government bonus. Cutting unnecessary spending can also help grow savings faster.
- Get Mortgage Advice– Speaking to a mortgage broker can help buyers find the best deals and understand what they can afford.
Final Thoughts
The property market is tough for first-time buyers right now, but with careful planning and the right support, it is still possible to buy a home. Prices and mortgage rates may change in the future, so staying informed and being prepared can make all the difference.
