Rising entry-level values intensify affordability pressures for new borrowers
Average prices paid by first-time buyers rose to £228,000 in December, up £5,000 – or 2.2% – compared with December 2024.
The figures, drawn from the latest UK House Price Index, underline the growing challenge for would-be homeowners trying to secure a first property, Coventry Building Society has warned.
The typical first-time buyer home price reached a recent high of £230,000 in November 2025. As purchase prices have climbed, the sums needed for deposits have increased in parallel, putting further strain on households already contending with higher living costs.
On the basis of November’s average first-time buyer price, a purchaser would now need to accumulate around £11,400 for a 5% deposit and £22,800 for a 10% deposit. For many aspiring borrowers, those targets may require longer saving periods or financial support from family, with implications for brokers advising on affordability and product selection.
The upward trend is not limited to first-time buyers. The UK House Price Index for December 2025 indicates that former owner occupiers paid an average of £332,000, a rise of £7,000 (2.2%) year-on-year. Home mover prices peaked at £335,000 in August 2025, suggesting that existing owners trading up or down are also facing higher capital requirements.
Rising values are also drawing more first-time buyers into the stamp duty net. In England and Northern Ireland, purchasers of a first home priced above £300,000 are liable for 5% stamp duty on the portion above that threshold. For borrowers in higher-priced regions, that additional upfront cost can be material and may need to be factored into savings plans alongside deposits, legal fees and moving costs.
Jonathan Stinton (pictured right), head of intermediary relationships at Coventry Building Society, said the current market is pushing the first rung of the housing ladder further away for many would-be buyers. “The bottom rung of the housing ladder continues to rise - and for first-time buyers, that makes an already difficult starting point feel even further away,” he said.
“One of the biggest pressures is the limited supply of suitable starter homes. There simply aren’t enough smaller, more affordable properties coming onto the market, which means buyers are competing for a very narrow pool of options.
“When demand is concentrated on such limited availability, prices naturally get pushed higher. It leaves many first-time buyers feeling as though the step they were aiming for has moved just beyond their reach, no matter how carefully they’ve planned or saved.”
For intermediaries, tighter affordability, higher deposit thresholds and potential stamp duty charges are likely to remain central considerations when structuring applications and advising clients on timescales. The combination of constrained stock and incremental price growth may also increase the importance of early engagement with lenders and the use of schemes or products aimed at easing access for first-time buyers.
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