Leeds BS analysed first-time buyer affordability between 1982 and 2022, and how the challenges of buying a first home changed within the UK housing market. Economic data, including OBR and Treasury forecasts, was used to also model what the next five years could hold, underlining the need for long-term solutions.

The report, titled A Place to Call Home shows that between 1982 and 2022 the multiple barriers facing first-time buyers continued to make it difficult to get on the housing ladder.

The report found that: House prices paid by first-time buyers were 16 times higher in 2022 than in 1982, while first-time buyer gross earnings were only seven times higher – meaning the house price to earnings ratio for this group more than doubled, from two times earnings to almost five times earnings.

Average deposit requirements rose from 25.5% of average first-time buyer earnings in 1982 (£2,100) to 115% in 2022 (£68,700).

According to the report, it would have taken up to 12 years for an average private renter to save their deposit in 2022, up from 2.5 years in 1982.

With the Bank of England base rate increasing 14 times to 5.25% since the end of 2021, the report points to a potent mix of high deposits and high repayments, making 2023 a crunch year for first-time buyers.

Mortgage repayments due to rising interest rates and saving for a deposit are taking up a greater share of earnings, even though the earnings are higher than in 2022.

This means those able to buy a first home are typically more affluent and will need higher incomes than ever before. It is getting harder to become a first-time buyer without help towards a deposit or the ability to live rent-free, leading to the gentrification of first-time buyers.

In its 2023-27 forecast, Leeds Building Society expects fewer first-time buyers every year than the 315,000 first-time buyer transactions in England in 2022.

Commenting on the findings Leeds BS chief executive Richard Fearon says: “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.”

He concludes: “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. 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.”

Earlier this week, Mortgage Strategy reported on the latest Halifax First-Time Buyer Review which revealed that the number of first-time buyers was down 22% between January and August 2023, compared to same period last year.