Over the past two decades even though the percentage of new house purchase loans taken out by first–time buyers (FTBs) have continued to increase, high house prices and affordability issues have meant that there has been a significant reduction in the proportion of mortgages taken out by single first-time buyers.  

In 2006 the proportion of loans taken out by singletons accounted for 53% of all FTB loans.  Today the figure is just 46% – highlighting the real pressures single FTBs face when trying to get a foothold on the housing ladder. With housing at its most unaffordable level for around 150 years, first time buyers are particularly impacted. Rates of home ownership amongst 25–34-year-olds is currently around 41% and has collapsed since 2003 when it stood at around 59%. 

According to recent data from UK Finance, the number of loans to first-time buyers fell in 2022 by around 9% to 370,200 compared to 2021 – a year which had seen the highest level of FTBs since 2006. Although the actual number of loans to FTBs fell in 2022, the proportion of loans to FTBs as a percentage of all house purchase loans increased and now stands at 54% – its highest ever level.  The continued number of FTBs entering the market reflects the overwhelming desire for people to become owner occupiers. 

But it is with singletons where the figures are the most alarming. The proportion of FTB loans taken out by single applicants fell in 2022 to 45%, reversing the increase seen in 2021 when there was a temporary stamp duty holiday.  In 2006, singletons accounted for 53% of all loans to FTB, but this proportion has fallen steadily as affordability issues continue to hit. During the first five months of 2023, the proportion of FTB loans taken out by single people stood at 46%. 

Should we be concerned about the reduction in the number of single first-time buyers entering the housing market?  

Yes. We all know that first time buyers are crucial to the health of the housing market, and we also know that the dream of owning your own home remains as strong as ever.   

However, over the last 50 years, due to a combination of an ageing population, an increase in the number of divorces, plus more people choosing to live alone there has been a change in household composition – particularly amongst single person households which has doubled. The changes in the makeup of UK households have increased the demand for properties from singletons who have suffered as the lack of housing supply has pushed up house prices to levels never seen before. 

But there is some light at the end of the housing tunnel for first time buyers, particularly through the shared ownership scheme which allows borrowers to buy a share in the overall value of a home and pay rent on the rest of it. The scheme is particularly good at helping first time buyers get on the housing ladder. 

Shared ownership has very quickly become the tenure of choice for many FTBs as in 2021/22 over three quarters of private registered provider shared ownership sales were to FTBs. Shared ownership can also help younger people become homeowners earlier with the average age of a shared ownership FTB being 31 years old compared to 34 years for FTBs in general. 

But shared ownership is especially important for singletons as it provides them with a much better chance to get on to the housing ladder. In 2021-22, around 56% of shared ownership purchases were made by one adult households, versus just 29% for FTB households in general. The average deposit required for a shared ownership mortgage in 2021-22 was £20,800, compared to £43,693 on average for FTBs. 

But as we approach the annual National Shared Ownership Week in September, it’s worth highlighting that singletons still face huge pressures in getting on the housing ladder due to insufficient new build houses being built.  

Across England there were 210,070 new build properties built in 2021 to 2022 of which only around 28% were classed as affordable homes. It’s estimated that over the next 15 years the UK will require 5 million new homes – an average of 340,000 new homes each year.  

Unfortunately achieving this won’t be easy as it is greater than the government’s current 300,000 ‘target’ which has not been achieved since 1971. The average number of new homes delivered each year over the last decade has been less than half of this figure.  

As the general election looms, solving the housebuilding problem must be the main focus for all political parties. 

Martese Carton is director of Mortgage Distribution at Leeds Building Society