First-Time Buyers Increase as Housing Market Improves

A "Sold" sign outside a house in a row of terraced houses in Guildford, southern England, on Aug. 6, 2024. Justin Tallis/AFP via Getty Images

The housing market experienced a resurgence in first-time buyer activity and steady house price growth in 2024, data from building societies suggest.

The number of first-time buyers with a mortgage rose by 13.8 percent in 2024, with 330,000 transactions recorded, according to Yorkshire Building Society.

This compares to 290,000 transactions in 2023, when the lowest first-time buyer lending figures in a decade were recorded amid the pressures of the cost-of-living crisis and interest rate hikes.

Meanwhile, house prices ended 2024 just below their all-time high, with Nationwide Building Society reporting a 4.7 percent annual increase in December.

The average house price reached £269,426, reflecting a monthly increase of 0.7 percent. This growth represents a recovery from affordability challenges that had tempered activity earlier in the year, said Nationwide.

“UK house prices ended 2024 on a strong footing, up 4.7 percent compared with December 2023, though prices were still just below the all-time high recorded in summer 2022,” said Nationwide’s Chief Economist Robert Gardner.

Interest Rates and Stamp Duty

Key drivers of the rebound in first-time buyer activity included two Bank of England (BoE) base rate cuts in 2024, which boosted buyer confidence. In the latest BoE vote of the year, policymakers held the interest rate at 4.75 percent in December, following the hike in inflation to 2.6 percent in October.

Yorkshire’s Group Economist Max Shepherd cautioned against expecting substantial reductions in mortgage rates in 2025, predicting rates would likely remain around four percent.

Economic factors such as low unemployment, real earnings growth, and an increased minimum wage also contributed to the uptick in first-time buyer activity. Shepherd highlighted the importance of these trends but warned of potential volatility in the market as stamp duty changes take effect in 2025.

From April, the “nil rate” band for first-time buyers will be reduced from £425,000 to £300,000, potentially spurring a rush of transactions in early 2025 as buyers seek to avoid higher costs.

Shepherd noted that higher property prices in southern England could disproportionately affect buyers in the region, pushing them into the stamp duty threshold.

Similarly, Gardner predicted a surge in transactions in the first quarter of 2025, followed by a quieter period.

Stamp duty changes “are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax,” he said.

Property experts noted that the surge in pre-April transactions may ease further in 2025, potentially leading to a more balanced market.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said that the “looming end of the stamp duty holiday persuaded people to leave the sofa for a spot of house hunting.”

“At a time when affordability is under so much pressure, your deposit will make a key difference, so it pays to consider whether there’s any way you can boost it,” she added.

Housing

House price performance varied significantly across the UK in 2024, with a clear north–south divide.

Northern regions, including the northeast, northwest, Yorkshire, and the Midlands, outperformed southern England, with prices rising by 4.9 percent annually. Northern Ireland saw the strongest growth, with a 7.1 percent increase, while Scotland recorded a 4.4 percent.

In contrast, southern England, encompassing the southwest, outer southeast, outer metropolitan areas, London, and East Anglia, experienced more modest price growth of 2.2 percent year-on-year.

The government has acknowledged that families across the country are “still struggling with the cost of living” and vowed to “put more money in the pockets of working people.”

At the heart of Labour’s housing strategy is an ambitious plan to build 1.5 million new homes over the next five years, significantly increasing the supply of social and affordable housing.

Acknowledging the limitations of brownfield land to meet the nation’s housing needs, the government plans to allow the targeted release of “grey belt” land.

This includes disused petrol stations, car parks, and other low-value areas within protected green belt zones, ensuring development is focused on underutilised spaces while preserving the integrity of valuable green spaces.

PA Media contributed to this report.