The number of first-time buyer transactions fell by 9% last year in the aftermath of the pandemic, estimates Yorkshire Building Society.  

The mutual forecasts the number of people taking their first step onto the property ladder dropped to 370,287 in 2022, from a 20-year high of more than 400,000 in 2021, which was driven by falling unemployment and low borrowing costs in the wake of the health crisis.  

But it adds that figures in 2020 and 2021 figures were skewed by the unusual market conditions surrounding the Covid-19 crisis.

The firm’s latest estimate for 2022 is a 5% year-on-year increase when compared with 2019, adding that this is also the second-highest annual total for 14 years, behind the pandemic-led anomaly of 2021.  

It says the largest months for FTB transactions in 2021 came in June and September, “fuelled by tapering changes to stamp duty relief for those with a house price between £300,000 and £500,000, and benefiting those in high-value areas such as London and the South East.   

“Without the same incentive in 2022, the forecasted number of FTBs for comparable months are static, in line with previous years’ figures.”  

But the mutual says that although the number of FTBs last year is likely to be fewer overall than the previous year, those who bought a property for the first time in 2022 are expected to represent 53% of all house purchases with a mortgage, up from 50% in 2021, and 41% a decade ago.  

It adds: “So, these latest estimates still signal strong demand, even with the average price of a typical FTB home rising by 10% to £272,500 in the past year. Prior to 2021, the last peak in first-time buyers was as far back as 2006.”  

Yorkshire Building Society strategic economist Nitesh Patel says: The year [2022] started much as 2021 had ended, with the supply of a significant number of low deposit mortgages, an overflow of healthy deposits from the build-up of household savings balances during the pandemic years and a steady economic picture.   

“Then came the infamous mini-Budget which sparked panic in the mortgage market, leading to low product availability, higher borrowing costs and a slowdown in house price growth among other things.  

“Coupled with the absence of a stamp duty holiday this year, these factors may mean this latest forecast is unsurprising, but it still shows that demand from FTBs remains strong, even with house prices being at historic highs for much of the year and the country experiencing such political and economic uncertainty.  

“The one constant in the housing market – the lack of supply at all stages of homeownership – will remain, which will help to maintain house prices.   

“The continued uncertain landscape, however, which may prevent would-be borrowers from making such a significant purchase or cause lenders to tighten affordability, could mean we’ll see a further fall in FTBs next year.”  

Twenty7tec director Nathan Reilly adds: “2022 saw a drop in the number of [broker] FTB mortgage searches in both real terms and as a percentage of the total market.   

“In real terms, there were 58,000 mortgage fewer searches in 2022 for FTBs compared to 2021. Keeping a working FTB market is important for the whole of the housing and mortgage market to function.”  

Yorkshire Building Society made its calculations using data from banking trade association UK Finance up to October 2022, with the November and December transactions being estimated by the mutual.