- Regional shortfalls exceed the populations of Brighton and St Helens
- First-time buyer activity in the North East and Yorkshire/Humberside is less than half of what it was pre-recession – while London is the least affected
- North East and Yorkshire/Humberside both missing more than four years’ worth of first-time buyers
- One in five 18-45s are ‘denied’ homeowners in the North East and South East
The South East and North West have been worst hit by the collapse of the first-time buyer market since the recession, according to analysis of government and industry data from Genworth, the private mortgage insurer.
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 plummeted 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 and2006 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).
North East first-time buyer market is less than half of its pre-recession size
Genworth’s analysis shows 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[i].
Table 1: Regional first-time buyer shortfalls since 2007
|
Area |
Average FTBs per year |
Average FTBs per year |
% of |
Total FTB shortfall since 2007 |
Equivalent district |
|
South East |
86,733 |
47,863 |
55% |
310,967 |
Brighton and Hove (281,100) |
|
North West |
46,461 |
23,875 |
51% |
180,685 |
St Helens (177,200) |
|
Yorkshire and Humber |
39,255 |
19,238 |
49% |
160,136 |
Harrogate (157,267) |
|
West Midlands |
37,148 |
19,663 |
53% |
139,888 |
Warwick (139,400) |
|
East Midlands |
32,970 |
16,875 |
51% |
128,758 |
Ashfield (122,508) |
|
Greater London |
53,642 |
39,175 |
73% |
115,739 |
Kensington and Chelsea (156,200) |
|
South West |
34,427 |
18,913 |
55% |
124,118 |
Exeter (124,300) |
|
North East |
23,191 |
10,575 |
46% |
100,927 |
Darlington (105,400) |
|
East Anglia |
16,048 |
8,663 |
54% |
59,088 |
Forest Heath (62,800) |
Source: CML/ONS/Genworth
North East and Yorkshire ‘missing’ over four years’ worth of first-time buyers
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[ii] – 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.
Table 2: ‘Missing’ first-time buyers and ‘denied homeowners’
|
Area |
Shortfall since 2007 |
Average FTBs per year 1974-2006 |
Number of years' worth of FTBs 'missing' |
18-45s in the region (ONS - 2014) |
Percentage of 18-45s ‘denied’ homeowners |
|
South East |
310,967 |
86,733 |
3.6 |
1,641,000 |
19% |
|
North West |
180,685 |
46,461 |
3.9 |
1,343,000 |
13% |
|
Yorkshire and the Humber |
160,136 |
39,255 |
4.1 |
1,005,000 |
16% |
|
West Midlands |
139,888 |
37,148 |
3.8 |
1,064,000 |
13% |
|
East Midlands |
128,758 |
32,970 |
3.9 |
835,000 |
15% |
|
Greater London |
115,739 |
53,642 |
2.2 |
2,309,000 |
5% |
|
South West |
124,118 |
34,427 |
3.6 |
926,000 |
13% |
|
North East |
100,927 |
23,191 |
4.4 |
471,000 |
21% |
|
East Anglia |
59,088 |
16,048 |
3.7 |
1,114,000 |
5% |
Source: CML/ONS/Genworth
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.”
- ENDS -
Notes to editors
Methodology
Research based on analysis by Genworth of data from the Office for National Statistics (ONS) and Council of Mortgage Lenders (CML) on the average number of first-time buyers from 1974 to 2014 and regional population numbers.
i ONS house price index for May 2015 shows a 46% increase in the price of houses in London in just four years (from May 2011) http://www.ons.gov.uk/ons/rel/hpi/house-price-index/may-2015/index.html
ii CML http://www.cml.org.uk/news/723/
Media contacts
For more information, please contact:
Andy Lane/Victoria Heslop, Instinctif Partners, TWC.Genworth@instinctif.com, 0207 427 1400
Suzy Awford, Public Relations for Genworth Financial, suzy.awford@genworth.com, 0208 380 2080, 07971 142 233
Rob Griffiths, Public Relations for Genworth Financial, rob@whitedragoncomms.co.uk, 07983 641 566
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