From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to for wider content and updates from UK Finance.

  1. Home
  2. News
  3. News & Views
  4. The challenge facing first-time buyers

The challenge facing first-time buyers


Published: 23 April 2015 | Author: Bernard Clarke

First-time buyers are hugely important for the wider health of the UK housing market. But our current market forecasts, for this year and next, are predicated on relatively subdued future levels of housing transactions. So, in this article we provide a longer-term perspective on the challenge to adding fresh impetus to first-time buyer numbers. 

The number of first-time buyers reflects demographic trends and factors affecting the ability or willingness of adults to get on the housing ladder. For the past 40 years or so, those aged under 35 have accounted for three-quarters or more of all first-time buyers. The number of adults under 35 has increased by 700,000 (roughly 6%) over the past five years, underpinning first-time buyer numbers to a modest degree.

The recent recovery in numbers

First-time buyers have certainly featured strongly in the market recovery, buoyed by the wider improvement in mortgage credit availability and government initiatives, most notably the launch of the two Help to Buy schemes. 

Last year, for the first time since 2007, first-time buyer numbers climbed above 300,000.

However, this is materially less than the annual total of 400,000 to 500,000, which was typical of previous decades. And activity levels have stalled since last summer, as affordability pressures continue to intensify and regulatory measures (both the implementation of the mortgage market review in April and macro-prudential actions in June) have acted to limit income stretch.

This begs significant questions about the future prospects of younger adults aspiring to become home-owners.

A long-term perspective sheds some useful light on the fundamental nature of the challenge facing prospective first-time buyers. A methodology developed by Alan Holmans some years ago provides a useful framework for combining first-time buyer numbers with demographic trends to identify the likelihood of different age groups making their first step into home-ownership. 

Using this approach, we can show graphically how well different age groups have managed to get on the housing ladder over time.

Chart 1: Buyer propensities by age groups, per 1,000 adults

 23.04.2015 News & Views 7 Buyer propensities by age groups per 1,000 adults

Source: CML estimates

A few prominent features stand out. 

The first is the secular decline in the ability of very young adults (those aged under 25) to get on the housing ladder. Some of this reflects the growth in tertiary education and lifestyle choices in favour of private renting. 

Younger first-time buyers

We can also see that the odds of younger age groups buying their first home have improved noticeably over the past few years.

Unfortunately, although the 2014 metrics are the best since the credit crunch, they compare poorly with longer-term trends. This is most obvious for the 25-29 years age cohort, where the chances of becoming a home-owner have barely recovered the lows of the early 1990s recession.

This might not matter so much if there was offsetting evidence that households were making a stronger push to home-ownership in their later years. But this does not appear to be the case.

Table 1 summarises past and projected first-time buyer numbers.

Table 1: Average annual number of first-time buyers by age group, 000s

  2001-2005 2006-2010 2011 2012 2013 2014 2015 2016-20
18-24   74 57 37    38    41 45 45 43
25-29    122 90 69 77 94 109 110 113
30-34 82 53 42 50 65 77 77 79
35-39 49 30 21 24 32 39 40 42
40-44 29 18 12 14 18 21 20 19
45+ 43 22 13 15 20 22 22 21
Total 400 270 194 218 271 311 313 317


Source: CML estimates
Notes: Projections, shown in italics, as based on 2014 buyer propensities

Unlike over the past few years, official projections suggest that the number of adults aged under 35 will be virtually flat over the next five years, and so a broadly neutral rather than positive factor for first-time buyer numbers. 

Assuming that buyer propensities continue at 2014 rates then implies almost unchanged first-time buyer numbers in total and for different age groups, and no recovering ability from older adults to get on the housing ladder.

Future prospects

Looking ahead, then, it seems likely – in the absence of major fresh policy initiatives – that buyer appetite is set to remain close to recent levels.

Holman’s methodology also allows us to roll forwards from today’s position and make some plausible projections about future home ownership rates for different age cohorts.

Table 2: Plausible home ownership paths, % by age, by year of birth

Born in Current age Past/future age
    20 25 30 35 40 45 50 55 60 65
1960 55 2 27 53 63 71 77 79 80 80 80
1970 45 2 21 50 65 71 73 75 76 77  
1980 35 1 15 35 44 51 55 57      
1990 25 0 8 26 39 47          


Source: CML estimates
Notes: Projections, shown in italics, are based on 2014 buyer propensities

Table 2 illustrates for those aged 55, 45, 35 and 25 this year (those born in 1960, 1970, 1980, and 1990 respectively), how their future home-ownership position might change in the coming years, assuming that the improved buyer propensities seen in 2014 levels continue for the foreseeable future.

So, for example, according to Table 2, 50% of today’s 45-year-olds were home-owners by the time they were 30, 73% are currently home-owners and the proportion may increase by a few more percentage points – to 76% - over the next decade.

Although this table is subjective to some degree, and we should not ascribe too much weight to the absolute metrics, it powerfully illustrates that younger adults, for example those aged 35, face a material home-ownership gap compared with those born in the 1970s or earlier. And, on current trends, those in this age group may struggle to narrow it even over the next 15 years or so. 

First-time buyers – and the dynamic of home-ownership

These trends would, if allowed to persist, have far-reaching consequences for the eventual size and shape of home-ownership, and dynamics of the housing market. 

However, in conclusion, it is worth reflecting that such developments are only partially baked in at this stage. 

A return to the levels of buyer appetite seen over 1999-2003 (a period before affordability pressures became unduly acute or lending terms very relaxed) would still make a dramatic impact for younger adults. Under such a scenario, for example, today’s 25-year-olds would over the next decade face prospective home-ownership rates fully ten percentage points higher than shown in Table 2.

At the CML, we were sad to hear a few weeks ago that Alan Holmans, chief housing economist at the then Department of the Environment, senior researcher at The Cambridge Centre for Housing and Planning Research, and long-term contributor to our own research publications, had died.

Alan loved analytical detail, and was kind-hearted enough to explain and share his methodology for estimating and projecting first-time buyer numbers. We have updated and extended Alan’s analysis above.  In great appreciation.