First-Time Buyer Demand Plummets Across UK Cities. What’s Going On?

The UK housing market is showing worrying signs once again. According to new research, first-time buyer (FTB) demand has dropped sharply across major UK cities, as affordability pressures and high mortgage costs continue to lock many aspiring homeowners out of the market.

So, what’s going on and what should property investors make of this? Let’s discuss.

First-Time Buyer Demand Falls Nearly 2% in 2025

Between the first and third quarters of 2025, first-time buyer demand fell from 34% to 32.3%, a decline of 1.7 percentage points. While that might sound minor, it translates to thousands fewer transactions involving first-time buyers.

Even more concerning is that only 1.8% of homes currently on the market qualify for first-home or government-backed schemes, limiting access to affordable housing across the country.

City-by-City Breakdown: Where Demand Has Dropped Most

The table below highlights how first-time buyer demand has shifted across key UK cities:

Cities That Are Still Holding Strong

Despite the nationwide slowdown, some UK cities remain relatively resilient.
In Bristol, Liverpool and Leeds, between 43% and 52% of Q3 home sales still went to first-time buyers. This shows that regional demand pockets remain alive, especially where house prices are more stable and employment opportunities are strong.

What’s Behind the Larger National Decline?

While wage growth and a wider range of mortgage products have provided some short-term relief for first-time buyers, the overall cost of homeownership remains a significant barrier.

Rising property prices, combined with high deposit requirements, mean that many potential buyers simply cannot save enough to enter the market. On top of this, the rising cost of living further strains household budgets, leaving less room for mortgage repayments.

Limited availability of homes also plays a crucial role. Even when buyers are financially ready, the scarcity of properties within their price range forces many to postpone purchasing, sometimes indefinitely.

Experts warn that unless structural reforms are implemented, such as government-backed housing schemes or measures to increase the supply of affordable homes, these challenges are likely to continue well into the future, keeping a large segment of young adults from taking their first step onto the property ladder.

Why This Decline in First-Time Buyer Demand Should Concern Property Investors?

First-time buyers are the foundation of the property ladder. When they pull back, the ripple effect impacts sellers, developers and the broader economy.

A prolonged dip in FTB activity risks creating a “missing generation” of homeowners, potentially increasing long-term rental dependence and reducing housing mobility.

Conclusion

The decline in first-time buyer demand paints a clear picture: the UK housing market remains unaffordable for many.

Addressing this requires coordinated efforts between policymakers, lenders and developers, ensuring that buying your first home doesn’t remain a distant dream.