Improving housing affordability helped lift first-time buyer activity during 2025 although deposit requirements and regional disparities continue to create funding pressures, according to Nationwide’s latest Housing Affordability Report.
Nationwide says affordability constraints eased over the year as earnings growth outpaced house price inflation and mortgage rates continued to fall.
This supported buyer demand, with first-time buyer activity running around 20% higher than in 2024 and accounting for a greater-than-average share of housing transactions.
The findings show continued demand for short-term and specialist funding solutions.
The findings show continued demand for short-term and specialist funding solutions to bridge deposit gaps, manage high loan-to-value transactions and support buyers in higher-priced regions.
FAMILY SUPPORT
Nationwide says that more than a third of first-time buyers relied on family support to raise a deposit in 2024–25, highlighting the ongoing importance of alternative funding strategies despite improving headline affordability.
On Nationwide’s main benchmark, a buyer earning the average UK income and purchasing a typical first-time buyer property with a 20% deposit would face monthly mortgage payments equal to 32% of take-home pay.
While still slightly above the long-run average, this is well below historic peaks and points to a more sustainable affordability backdrop.
Affordability has also improved when measured against earnings. The first-time buyer house price to earnings ratio fell to 4.7, now slightly below its 20-year average, suggesting some easing in the ability to save for a deposit.
SIX YEARS TO SAVE
However, the absolute level of deposits remains a major constraint. A 10% deposit on a typical UK first-time buyer home is now around £23,000, which would take close to six years to save based on putting aside 10% of average net pay.
In London, where deposit requirements are more than three times higher than in the North, saving could take around nine years.
Andrew Harvey (main picture, inset), Nationwide’s senior economist, says: “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 adds: “The share of high loan-to-value lending reached its highest level for over a decade, supporting stronger first-time buyer activity.”
