Home ownership through the ages - first-time buyers then and now

Home ownership through the ages - first-time buyers then and now

Tepilo takes a look at the main differences between first-time buyers now and in the decades since 1960, when the average FTB was only 23 years old.

A new study has offered a fascinating insight into the differences between first-time buyers now and in the past.

The research, commissioned by Keepmoat Homes, showed that the average first-time buyer of today is seven years older than in 1960.

What’s more, they need to save approximately £20,000 to put down as a deposit on a home, compared to £595.26 (equivalent to around £12,738 today) in the 1960s.

A drastic change in buyer profile

The poll, which spoke to 2,000 UK adults, found dramatic differences in the buyer profile of first-time buyers throughout the generations.

While the average first-time buyer in 1960 was only 23 years old, more than likely married and had a household income of only £2,854, the first-time buyer of today is likely to be in their thirties and relying heavily on financial help from loved ones when they do manage to buy.

Some 48% of today’s first-time buyers required financial help to buy, to the tune of £10,200 on average – with this funding mostly coming from the Bank of Mum and Dad. Modern first-time buyers are also far less likely to be married than their 1960s counterparts, while only 30% are in a relationship.

Significant growth since the turn of the millennium

Buying a home has become much harder in the last two decades, with house prices rising by more than £55,000 since 2000, while the average deposit has also gone up considerably from £12,988 in 2000 to £20,622 today.

Even in the 1990s, only 26% of first-time buyers needed financial assistance (at an average of £3,881), while the cost of a deposit was just over a quarter of the average household income of £20,591. Compare that to now, when buyers need more than half their average annual household income to raise the necessary deposit on a home.  

The average property purchase price was also much more modest in the ‘90s, with first-time buyers likely to pay around £78,225 for a starter home off a deposit of only £5,210. It still took buyers in this decade four years to save for a deposit, but that compares favourably to the five years and one month it takes average first-time buyers today.

In the 1960s, it took would-be buyers only two years and one month to save for a deposit. This crept up, along with the average age, in the 1970s to two years and eight months, with people buying slightly later in life at the age of 25.

By the 1980s, the size of deposit required was starting to motor (up to £2,955), the average age of buyers had increased to 28, and the length of time needed to save for a deposit had risen to three years and one month.

In the decades that followed the average age of first-time buyers, the size of deposit required, the average purchase price, the need for financial help and the time required to save for a deposit all increased, reaching a peak from 2011 onwards.

Household income is now higher, but so too are average house prices and deposits, which means nearly half of buyers now need financial help to buy.

Love and marriage

The research also highlighted how much the world has changed since the 1960s. While one in five first-time buyers are now single, just 3% bought on their own in the Swinging Sixties.  

By the 1970s, the number of first-time buyers who were married had dropped by 10%, but still stood at 74% with another 13% in a relationship. This fell drastically in the 1980s – a decade associated with the rise of individualism and a self-starting culture – to 49%. With the launch of Right to Buy making it easier than ever for people to own their own home, 24% of buyers in this decade were single. 

In the 1990s, the number of married first-time buyers fell drastically again, down to 29%. In fact, it was the decade where married and single first-time buyers reached parity, with 29% of buyers going it alone.

As of today, only 27% of buyers are married and 30% are in a relationship.

A long-term abode

Remarkably, the research revealed that 31% of people are still living in the first home they purchased. Even more remarkably, one in 10 of those who bought in the 1960s and 15% of those who bought in the 1980s still live in the same home.

First-time buyers of today, however, are less likely to stay put for the long haul, with two thirds of respondents believing people are now more likely to purchase a flat or small home to improve their chances of getting on the ladder. Once they start a family or need a bigger home, they then move onwards and upwards.

Positive signs

While first-time buyers are still finding it difficult to get on the property ladder, there are signs that the situation is improving. According to research carried out by UK Finance, the proportion of first-time buyers reached its highest level for a decade in 2017.

There was also the recent abolition of stamp duty for most first-time buyers – although this move has divided opinion somewhat – and the government’s various ongoing schemes to help young people onto the ladder, including Help to Buy and Shared Ownership.

Additionally, trade body NAEA Propertymark recently outlined some ways in which more first-time buyers could be helped to buy a property, including a relaxation of mortgage criteria, cheaper moving costs and a greater availability of longer fixed-rate mortgages.

For now, though, purchasing under the age of 30 is likely to be the exception rather than the norm, and a large number of buyers will continue to rely on the Bank of Mum and Dad to help fund their purchase.