Just 1 in 10 Renters Under 44 Can Afford a First Home, Says Industry Report

A new study reveals a stark decline in first-time buyer affordability across the UK. What does this mean for developers, lenders, and the wider housing market?

The numbers are hard to ignore. A new report from Public First, commissioned by the Home Builders Federation, has revealed that just 10.4 percent of people aged 20 to 44 who currently rent are in a financial position to buy a home in the UK. For single adults under 35, the figure drops to a sobering 2.9 percent.

These statistics paint a bleak picture for the future of homeownership — particularly among the generation that traditionally drives first-time buyer activity. In a market that has relied heavily on entry-level demand to fuel the broader chain, the implications could be far-reaching.

This article breaks down the report’s findings, explores how affordability has eroded, and considers the likely consequences for the property industry.

The Context: Rising Costs, Stagnant Wages

The past two decades have seen house prices rise dramatically across most of the UK. At the same time, wages have failed to keep pace with housing inflation. Add in higher deposit requirements, increased rental costs, and tougher mortgage stress testing, and the outcome becomes clear: homeownership is slipping out of reach.

For many renters, saving enough for a deposit is the primary barrier. With rents climbing in both cities and regional markets, disposable income is being stretched to the limit. According to the report, only a small minority of households can save even modest amounts each month.

This affordability crisis is not limited to London or the South East. While those areas are the most expensive, the report highlights regional pressures across the Midlands, North West, and Scotland.

The End of the First-Time Buyer Engine?

First-time buyers are often described as the engine of the housing market. They enable others to move up the ladder, keeping the transaction chain flowing.

But according to the report, the number of first-time buyers could fall to as low as 69,000 per year — a dramatic drop from the historic range of 200,000 to 300,000 annually.

This collapse in buying power has knock-on effects:

• Developers may delay or cancel projects targeted at entry-level buyers
• Mortgage lenders face reduced demand for first-time buyer products
• The broader market experiences reduced liquidity and slower sales progression

If nothing changes, we risk entering a cycle where fewer homes are built, fewer are bought, and affordability deteriorates further due to scarcity.

What’s Driving the Decline?

Several core factors are contributing to the affordability breakdown.

1. Deposit Requirements

Most lenders still require a minimum deposit of 5 to 10 percent. For even a modest £200,000 home, this equates to £10,000 to £20,000 — a sum well beyond the reach of many renters, especially in single-income households.

The Help to Buy scheme previously offered a solution through government-backed equity loans. But since its withdrawal in March 2023, no comparable replacement has been introduced.

2. Mortgage Stress Testing

Post-2008 lending reforms introduced strict affordability criteria. While these have protected the market from high-risk borrowing, they also limit access to credit for applicants with variable income, student debt, or family obligations.

Even those with steady employment may be rejected if outgoings exceed lender models. The system leaves little room for individual circumstance.

3. Rising Living Costs

Inflation has affected everything from food and transport to childcare. With cost-of-living pressures mounting, the ability to save for a deposit — let alone take on mortgage repayments — is out of reach for many households.

The report suggests that unless intervention occurs, ownership rates among those under 44 will continue to decline over the next five years.

Industry Calls for Help to Buy 2.0

The Home Builders Federation is calling for the government to revive or replace Help to Buy. Their proposal includes:

• A new low-deposit mortgage scheme
• Government equity loans to reduce upfront costs
• Shared ownership options with easier exit routes

They argue that without state-backed support, the housing pipeline will suffer. Developers are already scaling back builds in some regions due to lack of buyer demand at current pricing levels.

Other voices in the industry have echoed this. Some propose tax relief on first-time purchases, others suggest easing mortgage regulation for long-term renters with solid payment histories.

Whatever the approach, consensus is building around the need for intervention.

Government Response

The government has so far resisted calls for a full Help to Buy replacement, citing concerns over cost and market distortion. Instead, it has proposed:

• £800 million investment in affordable housing schemes
• Expanded mortgage guarantee schemes for lenders
• Consultation on long-term fixed-rate mortgages

Critics argue that these measures fall short. With affordability stretched to breaking point, limited supply and small-scale interventions may not be enough to restore balance.

Without a clear policy change, many expect first-time buyer numbers to fall further in 2025.

Strategic Implications for the Property Sector

This crisis presents both challenge and opportunity for industry players.

Developers

Projects aimed at first-time buyers may need repositioning. Alternative tenures — such as build-to-rent or shared ownership — could provide a more stable pipeline.

Designing flexible housing with lower price points, strong energy performance, and community features may help boost appeal.

Lenders

Banks and building societies will need to innovate. Mortgage products that account for rent-payment history, gig economy income, or co-buying models could unlock latent demand.

Lenders who adapt now may win market share as affordability pressures evolve.

Investors and Landlords

Reduced homeownership means more people renting for longer. Demand for high-quality, secure rental stock will continue to grow.

Landlords who can offer stable tenancies, strong maintenance, and energy-efficient homes will benefit from long-term occupancy and rental growth.

Final Thought

The dream of homeownership is fading for a generation. While the reasons are complex, the consequences are simple: fewer buyers, slower chains, and a market that risks stagnation at its base.

For professionals in the property sector, this moment demands clear thinking and bold strategy. Whether through innovation, lobbying, or adaptation, the industry must respond.

Because if we cannot support the next wave of homeowners, the entire system loses momentum.