Rising first-time buyer demand hides stark differences by region and occupation
Continued improvements in housing affordability supported first-time buyer activity across the UK in 2025, although challenges remain unevenly distributed by occupation and region, according to recent analysis by Nationwide.
Affordability conditions improved as house price growth remained below earnings growth and mortgage rates continued to decline. This combination helped underpin demand among first-time buyers, whose share of overall house purchase activity exceeded the long-run average during the year. Activity among first-time buyers was around 20% higher than in 2024.
“With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased somewhat over the past year, helping to underpin buyer demand,” said Andrew Harvey, Nationwide’s senior economist.
“Indeed, the first-time buyer share of house purchase activity was above the long run average, supported by easier credit availability, with the share of high loan-to-value lending (i.e. with a deposit of 15% or less) reaching its highest level for over a decade.”
Costs still high for average earners
Nationwide’s main affordability benchmark shows that a buyer earning the average UK income and purchasing a typical first-time buyer property with a 20% deposit would face monthly mortgage payments equal to 32% of take-home pay. This is slightly above the long-run average of 30% and well below the peak of 48% recorded in 1989.
The first-time buyer house price to earnings ratio improved to 4.7, slightly below its 20-year average. While this suggests modestly easier conditions for saving a deposit, challenges persist. A 10% deposit on a typical first-time buyer property is around £23,000. Based on saving 10% of average net pay, it would take nearly six years to accumulate this amount.
Regional differences remain significant. A 10% deposit in London is more than three times larger than in the North. Saving for a deposit would take about nine years in London, compared with around four years in the North, based on average earnings. More than a third of first-time buyers in 2024 and 2025 relied on financial assistance from family or friends to raise a deposit.
Affordability also varies widely by occupation. Mortgage payments relative to take-home pay are lowest for those in managerial and professional roles. They are most challenging for people working in sales and customer service roles and in elementary occupations, where payments can account for around 50% of average take-home pay.
Across regions, affordability improved in most parts of the UK, with the exception of Northern Ireland. London remains the least affordable region despite recent improvement, while the North and Scotland continue to show the most favourable conditions for first-time buyers.
