Table of Contents
What does the housing market look like for first time buyers in 2025?
The shape of the housing market has shifted dramatically over the past few decades. When we talk about first time buyers now, we’re really referring to a different demographic than that of 25 years ago, when the average age of a first time buyer was 29. Today, it’s risen to 34.
Additionally, the stamp duty holiday for First time buyers is due to finish at the end of March this year. This means that the current 0%-rate threshold for first time buyers will reduce from £425,000 down to £300,000. We can assume that there will be an influx of customers trying to push through completion by the end of March.
Who are the first-time buyers now?
We’ll continue to see support from BOMAD (the ‘Bank of Mum and Dad’) in the form of deposits for around 40% of first-time buyer purchases in 2025. The average gift being given by family members is c.£25,000 – a trend that is more concentrated in London and the Southeast, where property prices are higher. This boost to deposits means that those first-time buyers can benefit from either lower monthly mortgage repayments or from being able to buy a home sooner.
More affluent first-time buyers with parental support will continue to constitute a significant proportion of the first-time buyer population, while home ownership for younger adults outside of this demographic will remain challenging. According to the 2021 census, 4 million adults now live with parents – an increase of nearly 15% compared to 2011.
Deposit raising and affordability remains difficult, to the point that we could probably call it the collapse of youth home ownership. And really, there’s nothing that suggests the market is going to get easier for this demographic in 2025.
Where does this leave young people today? The scale of the financial challenge that young adults face is evident when we scrutinise real data on their earnings and savings. Only a small minority (8%) of those aged 25-to-34 who are not homeowners have sufficient savings to afford a 10% deposit on the average first-time buyer home in their region; indeed, half (48%) of non-home owning young family units have less than £1,000 in the bank.
