What's the average first-time buyer deposit by region in 2023?
Discover the varying amounts being saved by first-time buyers across different regions in the UK to secure a home, ranging from £26,400 to £144,500. Explore the regional variations in savings required to purchase a property in the UK.
The average deposit paid by a UK first-time buyer for a 3-bed home in 2023 is £34,500 for a £240,000 home.
That amounts to a 15% deposit for the property.
However, the amount you need to save varies according to where you live in the UK and of course, the level of deposit you wish to pay.
100% mortgages are now available, meaning you don’t have to pay any deposit at all to buy a house.
The 95% mortgage scheme is also running until the end or 2023, meaning you only need to save a 5% deposit for the home you want to buy.
According to UK Finance, most first-time buyers try to put down a larger deposit for their first home - amounting to 24% of the total property price.
That’s because a bigger deposit opens up better mortgage rates from lenders.
To put a 24% deposit on a £240,000 property, you would need to save £57,600.
Let’s take a look at how much first-time buyers are paying to step onto the property ladder across the UK.
We’ve used our data to calculate the average property prices for first-time buyers in each region, based on sold house prices.
UK Finance have provided the information on the average deposit paid by first-time buyers within each region.
And we’ve also shown how much a 15% deposit would be for each regional property value.
From the most expensive areas to the cheapest, these are the average deposits paid by first-time buyers in 2023.
Average first-time buyer deposits paid across the UK
| Region | Average first-time buyer property price | Average deposit | 15% deposit |
|---|---|---|---|
| UK | £240,000 | £34,500 | £34,500 |
| London | £425,000 | £144,500 | £63,750 |
| South East | £300,000 | £72,000 | £45,000 |
| East England | £300,000 | £72,000 | £45,000 |
| South West | £220,000 | £52,800 | £33,000 |
| East Midlands | £190,000 | £45,600 | £28,500 |
| West Midlands | £190,000 | £45,600 | £28,500 |
| North West | £150,000 | £36,000 | £22,500 |
| Wales | £150,000 | £36,000 | £22,500 |
| Yorkshire & The Humber | £140,000 | £33,600 | £21,000 |
| Scotland | £135,000 | £32,400 | £20,250 |
| Northern Ireland | £130,000 | £31,200 | £19,500 |
| North East | £110,000 | £26,400 | £16,500 |
Zoopla
Working from home to help keep property affordable
According to a prominent economist at the Office for Budget Responsibility, it is anticipated that affordable rural areas will experience higher growth in house prices, while city centers are expected to witness a slower rate of growth.
The rise of remote working is anticipated to have a positive impact on the affordability of house prices for first-time buyers in the coming years. The Office for Budget Responsibility predicts a decline in house prices from their peak in the fourth quarter of 2022, followed by a recovery in the second quarter of 2024. Projections indicate that by the end of 2025, house prices will experience a year-on-year increase of 2.8%, with further uplifts of 3.6% in both 2026 and 2027.
Remote working, which gained momentum during the pandemic, is expected to bring about permanent changes in the housing market by allowing individuals to relocate from cities and opt for a countryside lifestyle. According to David Miles, a leading economist at the Office for Budget Responsibility, this shift will lead to an upward pressure on property values in rural areas, while house price growth in city centers and London is anticipated to slow down.
Why is this happening?
The Covid-19 pandemic has brought about lasting transformations in people's work habits, with a significant number of individuals now being granted the option to work remotely, either partially or entirely.
Traditionally, cities experienced more pronounced increases in house prices compared to rural areas, primarily due to a disparity between supply and demand driven by employees seeking residences within convenient commuting distance of their workplaces.
However, the ability to work from home has mitigated this imbalance, resulting in increased demand for homes in rural areas. As a result, house price growth in these countryside locations is expected to be higher, reflecting the shift in demand.
Who does it affect?
The trend is good news for first-time buyers. Earnings growth has failed to keep pace with house price rises for much of the past decade, making property increasingly unaffordable for those trying to get on to the housing ladder.
Slower house price growth not only gives earnings a chance to catch up, but it also means first-time buyers will not face the race to put together a deposit before they get priced out of the market.
The situation is also positive for those living outside of city centres, as it suggests house price growth will be more evenly spread going forward.
This should make it easier for people to relocate from the countryside to towns and cities if they choose to, as well as move between different regions.
What’s the background?
House price growth has already slowed down compared with previous years due to the impact of higher mortgage rates and the rising cost-of-living on affordability.
Latest UK House Price Index found that buyer demand is currently below average in the Midlands, South East, South West and East of England, areas that have seen the highest house price rises in the past three years, which has impacted affordability.
Across the UK as a whole, house prices have edged down by 1.3% during the past six months, and are expected to remain broadly unchanged for the rest of the year.
Key takeaways:
• The housing market will undergo permanent changes due to the rise of remote working, allowing individuals to relocate from cities to rural areas.
• This shift is expected to result in higher price growth in rural areas, while cities may experience lower growth, leading to a more balanced market for homebuyers.
• According to the Office for Budget Responsibility, house prices are projected to decline from their peak in the fourth quarter of 2022 but rebound in the second quarter of 2024.
House prices hold steady for sellers
Housing market activity levels recover as falling mortgage rates and a strong labour market boost buyer confidence.
UK house prices have fallen 1.3% over the last 6 months but the rate of price falls has now slowed.
Activity levels are recovering and more sellers are coming into the market as falling mortgage rates and a strong labour market boost buyer confidence.
And we’re not seeing any evidence of a build-up of unsold homes.
The number of homes listed for more than 90 days in most areas is in line with the 5-year average.
So while new sellers will need to set their asking prices carefully if they are serious about moving, there’s no need for larger price falls to clear stock at this stage.
The best areas to sell a home right now
Sellers in the North East, Scotland and London are seeing above average activity, with sales levels 10% higher than the rest of the UK.
That’s because the North East and Scotland are both more affordable markets.
And while London isn’t (homes in the capital cost twice as much as those in the rest of the UK on average), its affordability has improved over the last 7 years as prices failed to rise inline with the rest of the UK.
What's happening with house prices?
In fact, house price inflation in London is currently at -0.2% year-on-year.
That means homes are now better value for would-be buyers in the capital, especially those looking to buy flats, since their values haven’t risen since 2016.
Increased migration into the UK is also likely to be supporting above-average demand and sales rates here.
However, it’s a different picture in the South and Midlands, where house prices shot up over the last 3 years. Here demand remains below average.
That’s because higher prices, combined with higher mortgage rates and the cost of living, have taken more buyers out of the market in these areas.
That said, there are still active buyers in these markets, shown by above-average sales, albeit at a lower level.
Higher mortgage rates push landlords to sell-up
Some landlords are looking to sell their properties in the face of higher mortgage rates, which is also adding to the supply of homes for sale.
Some 1 in 10 (11%) of homes listed for sale were previously rented out, a level that peaked at 14% in 2020 and which has drifted lower over the last 3 years.
Ex-rental homes have an asking price that is 25% lower than previously owned homes (£190,000 v £250,000), which makes them appealing to first-time buyers.
What should I do if I’m planning to sell my home this year?
While more sales are being agreed, sellers must remain realistic on pricing to attract buyer interest.
Some 18% of homes currently listed for sale on Zoopla have had their asking price reduced by 5% or more, compared to 28% in February.
Price reductions typically come 8 weeks after a property is first listed, as sellers try to boost interest from buyers.
What’s going to happen to the housing market in the second half of this year?
While demand is down due to rising mortgage rates, lending regulations have helped to temper the impact this has on house prices.
That said, we do expect prices to continue to drift lower throughout 2023.
The increased likelihood of further interest rate rises, meaning higher mortgage rates, is likely to weaken demand and activity in the second half of 2023.
Rising mortgage rates reduce buying power and demand for homes, leading to a downward pressure on house prices.
And the number of home sales taking place in 2023 are on track to be 20% lower than last year.
Key takeaways
- Rate of house price falls slows as buyer confidence returns
- Sellers need to set asking prices carefully but no need for larger reductions
- Sales in the North East, Scotland and London are going well with activity levels 10% higher than the rest of the UK