The Intermediary – October 2026 - Flipbook - Page 25
RESIDENTIAL
Boosting first-time
buyer demand is
only half the battle
F
irst-time buyers (FTBs)
have long faced one
fundamental obstacle
when trying to get onto
the property ladder:
affordability. It isn’t a
lack of aspiration or appetite to own
a home that is holding them back,
but the financial realities of doing so.
Raising a deposit while also meeting
affordability requirements has become
an increasingly difficult hurdle and,
as a result, we’ve started to see FTB
demand lose some momentum.
Our latest research found that just
31.7% of homes suitable for FTBs had
found a buyer during Q3 of this year.
That’s down from 32.9% in Q2 and
marginally below the level seen this
time last year. So the Government’s
decision to introduce its new Your
First Home scheme is welcome and,
frankly, not before time.
The proposed scheme will provide
eligible first-time buyers purchasing
a new-build home with a 20% equity
loan, reducing the minimum deposit
requirement to just 2.5%. For those
who can comfortably afford the
monthly cost of homeownership
but have struggled to accumulate
a substantial deposit, this could
significantly reduce one of the
biggest barriers.
We should expect to see first-time
buyer demand strengthen as the
scheme is introduced and awareness
grows. But improving the purchasing
power of first-time buyers only
addresses one side of the equation.
Our research also found that homes
suitable for first-time buyers currently
account for just 1.8% of all properties
listed for sale across Great Britain.
That highlights the danger of focusing
solely on stimulating demand without
ensuring that supply increases
alongside it.
If we give more buyers greater
financial firepower but fail to
provide them with enough homes to
purchase, the inevitable risk is that
this additional demand simply puts
further upward pressure on prices.
We’ve been here before
The previous Help to Buy equity loan
scheme undoubtedly helped many
people onto the property ladder. The
Government’s recently published
evaluation found that it increased
access to homeownership and had a
positive impact on housing supply,
with around 15% of new homes
built in England over the lifetime of
the scheme estimated to have been
aributable to Help to Buy.
However, the scheme was also likely
to have contributed to higher property
prices, particularly in areas that were
already comparatively expensive.
Buyers were already paying an average
new-build premium of around 5%
compared with similar second-hand
homes, with properties purchased
through Help to Buy commanding an
additional premium of around 1%.
A scheme designed to make
homeownership more accessible
cannot simply be judged by how much
it reduces the deposit required on
day one. We also have to consider the
price being paid for that property, and
what position the buyer could find
themselves in several years later.
If increased purchasing power
contributes to inflated new-build
values, buyers could find that the
premium isn’t reflected in the resale
market further down the line. In the
worst cases, that creates the potential
for negative equity and makes the
next step up the property ladder
considerably more difficult. That’s
why the supply response to Your First
Home will be so important.
VERONA FRANKISH
is CEO at Yopa
There is a positive argument here.
Stronger buyer demand can improve
developer confidence and encourage
additional housebuilding. If the
latest scheme gives developers the
confidence to break ground, progress
sites and bring more new homes
to market, it could help address
both sides of the equation. But that
additional supply has to materialise.
In the short-term, we would expect
improved affordability support to
provide a catalyst for first-time buyer
demand, particularly once the finer
details of the scheme are confirmed
and it begins to filter through to the
market. As that demand converts
into purchases, we should also see the
benefits feed through into mortgage
market activity, transaction levels
and, particularly within the newbuild sector, house prices.
What happens next?
The scheme has the potential to
improve accessibility while also
increasing the stock available to
future buyers. If supply fails to keep
pace, however, we risk creating more
competition for an already inadequate
number of homes and seeing a greater
proportion of the financial assistance
absorbed by higher property prices.
Helping FTBs overcome the initial
affordability hurdle is important and
should provide a much-needed boost
where demand has started to soen.
But improving demand is only half
the bale. For this latest intervention
to improve first-time buyer
affordability over the long term, we
need to see the supply of new homes
rise with it. ●
October 2026 | The Intermediary
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