According to analysis of government and industry data from Genworth, the South East averaged 86,733 first-time buyers a year from 1974, when records began, up until 2006. But since 2007 when the financial crash hit, this has dropped to just 47,863 a year. As a result, this has created a total shortfall of 310,967: the biggest of any English region and 11% more than the entire population of Brighton and Hove (281,100).
The North West has also seen first-time buyer numbers drop from 46,461 a year between 1974 and 2006 to 23,875 between 2007 and 2014. This has created a shortfall of 180,685 first-time buyers, exceeding the entire population of St Helens (177,200).
The North East’s first-time buyer market has been hardest hit in percentage terms. The average number of first-time buyers between 2007 and 2014 (10,575) is less than half (46%) of the pre-2007 average (23,191): the lowest percentage of any region.
In contrast, London is the least affected in relative terms and has lost just a quarter of its first-time buyers in percentage terms. Its average of 39,175 between 2007 and 2014 is equal to 73% of the pre-recession average, despite the continued house price increases London has seen in recent years.
Genworth’s analysis also reveals that many regions are missing out on years’ worth of potential first-time buyers. The North East is worst affected with a shortfall of 100,927 compared to pre-recession activity: equivalent to 4.4 years’ worth of ‘missing’ buyers.
Similarly, in Yorkshire and the Humber– where the regional shortfall of 180,685 is greater than the entire population of Harrogate (157,267) – this equates to 4.1 years’ worth of ‘missing’ first-time buyers.
Comparing these shortfalls to the regional populations of 18-45 year olds – the age group which traditionally accounts for around 90% plus of first-time buyers – suggests a significant percentage are potentially ‘denied homeowners’ as a result of the fall in first-time buyer numbers.
For example, a shortfall of 100,927 first-time buyers in the North East compared to an 18-45 population of 1.3 million means as many as 21% could be classed as ‘denied homeowners’. In the South East a shortfall of 310,967 compared with an 18-45 population of 1.6 million means 19% are in the same position.
Simon Crone, vice president for mortgage insurance – Europe at Genworth, commented:
“Tougher regulation and higher capital requirements for lenders as a result of the recession have accelerated the fall in homeownership and dramatically reduced the number of people – especially younger households – who are able to buy their first home. A dual crisis has emerged with the shortage of new homes exacerbated by a shortage of loans traditionally used to help first time buyers get on the property ladder with 5% or 10% deposits.
“Our analysis shows that all regions have felt the impact of the squeeze on first time buyers, regardless of the so-called ‘North/South’ divide. While London and the South East face the biggest pressure of high house prices, a lack of housing supply nationwide and limited access to first-time buyer mortgages has left many regions with years’ worth of ‘missing’ owner-occupiers.
“First time buyer numbers remain woefully below where they were before the recession, and there needs to be a cohesive plan in place across the UK to address this. Permanent changes are underway to the planning system to get housebuilding going, but the Help to Buy mortgage guarantee remains a temporary solution to support first-time buyer aspirations. Private mortgage insurance is helping building societies to support first time buyers while banks are largely reliant on Help to Buy. It is imperative they consider how to continue supporting first-time buyers when that comes to an end. Failure to tackle all elements together threatens to permanently undermine homeownership for future generations.”
