The boss of Britain’s largest housebuilder has said it is the most challenging time to be a first-time buyer since the financial crisis, as the dream of home ownership moves increasingly out of reach for many young people.
David Thomas, the departing chief executive of Barratt Redrow, said a combination of rising interest rates, higher levels of student debt and the squeeze on wages is making it “challenging, very, very difficult” for young people to get on the housing ladder. He described the situation as “very, very comparable” to the post-2008 period, particularly in London and the south-east.
Thomas pointed to higher student loan repayments reducing the amount banks assess as available income for mortgages, shrinking the pool of potential buyers. As a result, the average age of first-time buyers is increasing, contributing to “generational inequalities”. He called on the government to introduce a package focused on first-time buyers, adding that housebuilders would be happy to contribute.
Separate figures from Zoopla showed there are 6% fewer first-time buyers in the market than a year ago. However, those still buying are targeting homes worth £10,000 more than last year, with an average price of £254,750 – up 4.3% year-on-year. In London, the average first-time buyer price has exceeded £500,000 for the first time, reaching £502,250.
The rise in target prices is attributed to changes in mortgage affordability testing, which has made more homes accessible to buyers. Outside London, over half (53%) of first-time buyer inquiries are for three-bedroom houses.
