First-time buyers made a strong entry into 2025, but Yorkshire Building Society warns this month’s increase in the stamp duty thresholds – which will see many paying thousands more - could change housing market fortunes if it deters them from buying.
The Society’s analysis of data from CACI suggests the first quarter of 2025 saw the highest number of first-time buyer applications since the 2022 post-Covid peak. A total of 125,648 first-time buyers applied for a mortgage between January and March 2025.
In fact, the number of first-time buyer transactions rose 12% between Q1 2024 and Q1 2025, double the average year-on-year growth recorded for the same period since the stamp duty incentives were introduced in 2017. The ratio of first-time buyes to overall purchasers also hit an all-time high in Q1 2025, at 55.75% compared to 49.78% eight years ago.
Meanwhile, final UK Finance figures for 2024 show that were 333,046 first-time buyer home purchases - up 15.98% from 287,161 in 2023 – which marked the lowest annual activity since 2013. Overall purchase activity was also up 8%, with 1.1 million transactions compared to one million in 2023 – 54% (620,777) of those among first-time buyers.
Max Shepherd, group economist for Yorkshire Building Society, said: “First-time buyer transaction levels to the end of March 2025 were bolstered by people rushing to beat the 1st April deadline.
“However, given the first-quarter figure has risen steadily since the incentive was introduced in 2017, the risk now is that the higher purchase tax, coupled with high house prices and other costs, add up to a cliff-edge moment for a group of borrowers who power the entire market.
“Some first-time buyers will have missed the 31st March deadline for saving money and been disappointed. Others are coming to terms with having to save up even more to get purchase-ready, amidst already-stretched affordability.
“This means we could see activity tail off from Q2, and it just remains to be seen by how much. The added danger is that if this change also deters home-movers, there will be fewer homes available for first-time buyers to buy, which would in turn increase property prices further out of their reach. Concerted industry action is needed to ensure this unwelcome change doesn’t send the positive momentum built over the past eight years into reverse.”
