## Improved Affordability Supports First-Time Buyers

Nationwide’s latest Housing Affordability Report reveals that 2025 saw a meaningful easing in affordability constraints for first-time buyers in the UK. Slower house price growth combined with rising incomes and falling mortgage rates contributed to this improvement. As a result, first-time buyers accounted for a larger share of property purchases than the long-term average, with activity approximately 20% higher than in 2024.

Andrew Harvey, Nationwide’s senior economist, explained: “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.” He also noted that credit availability has improved, with high loan-to-value lending—where deposits are 15% or less—reaching its highest level in over a decade.

For landlords and letting agents, this rise in first-time buyer activity could signal increased market turnover and potential shifts in tenant demand as more renters transition to homeownership.

## Regional Variations in Affordability Persist

Despite overall improvements, affordability remains uneven across the UK. London continues to have the highest house price to earnings ratio at 7.5, while Scotland offers the most affordable conditions with a ratio of 2.9. These disparities create a divide between those aspiring to buy and those realistically able to do so.

The Nationwide report highlights that a London buyer needs to save a deposit more than three times larger than a buyer in northern regions, with saving times stretching to around nine years in London compared to roughly four years in the North. This significant gap reinforces the ongoing challenges faced by buyers in the South of England and London, where family support remains crucial—over a third of first-time buyers in 2024/25 received help through gifts, loans, or inheritance.

For landlords, these regional differences may influence rental demand patterns, with areas of lower affordability likely to sustain stronger rental markets.

## Larger Loans and Mortgage Payments

The report also indicates an increase in high loan-to-value borrowing, with more buyers putting down deposits of 15% or less. Nationwide’s benchmark shows that a buyer on an average UK income purchasing a typical first-time buyer home with a 20% deposit would face monthly mortgage payments equivalent to 32% of take-home pay. This figure is slightly above the long-term norm of 30%, but significantly below the 48% peak recorded in 1989.

The first-time buyer house price to earnings ratio has improved to 4.7, marginally below its 20-year average, suggesting that saving for a deposit has become somewhat easier. However, Nationwide warns that renters still face considerable challenges due to sharp rental increases in recent years, which may impact their ability to save for homeownership.

## Affordability Across Occupations

Affordability improvements have been observed across all job groups since 2024, with the most significant gains in caring, leisure, and service roles thanks to stronger wage growth. Conversely, sales and customer service staff, as well as those in occupations such as labourers, cleaners, and couriers, continue to experience the greatest financial strain, with mortgage payments consuming around 50% of their average net income.

This occupational disparity suggests that while some sectors may see increased homeownership, others will remain reliant on the rental market, affecting landlord tenant profiles and demand.

## Industry Perspectives on Market Outlook

Nathan Emerson, CEO of Propertymark, commented: “While it’s encouraging to see affordability improving and first-time buyer activity picking up, this report underlines that homeownership remains out of reach for many, particularly those on lower and middle incomes. The fact that a typical first-time buyer still needs close to six years to save for a 10% deposit shows just how significant the deposit barrier remains, especially in London and the South of England.”

Tom Bill, head of residential research at Knight Frank, added: “Improved affordability is like a planning system incentive – it’s only positive for the housing market on paper. Confidence is the key missing ingredient and although it is recovering after the Budget, the market appears to need a demand-side shot in the arm as the economy struggles to grow and Westminster politics remains volatile. We expect low single-digit UK house price growth this year, primarily based on lower mortgage rates.”

For landlords and agents, these insights highlight the importance of monitoring economic and political factors that influence buyer confidence and market activity.