The number of first-time buyers in Scotland fell by 14% between January and August 2023, compared to the same period in 2022, according to the latest Bank of Scotland First-Time Buyer Review. 

This fall is not as sharp as the picture for the UK overall, where first-time buyers fell by 22%.

First-time buyers in Scotland still accounted for half (50%) of all home loans agreed between January and August this year, the same proportion as in the same period in 2022 and 2021, as activity in the wider housing market slowed. Various challenges in the housing market, including increases to mortgage rates and periods of lower availability of mortgage deals – will have impacted many first-time buyers in recent months. Inflation has become a further barrier to saving a deposit – an aspect of new home ownership that was already difficult for many, considering the average deposit needed is now £38,871.

Graham Blair, mortgages director, Bank of Scotland, said: “Scotland offers some of the most affordable places for those looking to buy their first home, with Inverclyde, West Dunbartonshire and Ayrshire the most affordable places in Scotland and the UK overall. 

“While lenders are ready to help – we provided around £5.5bn in lending to first-time buyers in the first half of this year – it doesn’t change the fact that those buying their first property continue to face challenges. While the average deposit raised has dropped slightly compared to last year, at nearly £39,000, it is still a sizeable amount to get together and, overall, first-time buyer numbers fell in the first half of this year, compared to last year.

“However, the expected further fall in house prices this year – alongside stronger income growth – may somewhat offset higher interest rates, which will be welcome news to first-time buyers. Overall, Scotland continues to be a great option for first-time buyers, with the average first property coming in at just under £100,000 less than the UK average.” 

While the number of first-time buyers has fallen between January and August of this year compared to the same time last year, a large number got on the ladder over the previous two years as, post-pandemic, buyers took advantage of low interest rates and government help available at the time, including Land and Buildings Transaction Tax relief and Help to Buy schemes. This means that, between January and August this year, the average number of people entering the property market for the first time was 22% higher than ten years ago.

Price tags and deposits

First-time buyers in Scotland now pay an average of £188,252, up 1% over the last year, but 35% lower than the UK average (£288,030). The average deposit put down on a first home in Scotland is now £38,871 – the second highest deposit (21%) as a percentage of the property price, across the UK. 

Affordability 

Nine of the top 10 most affordable places for new buyers in the UK are in Scotland. 

Inverclyde, in the West of Scotland, is the most affordable. Based on average earnings of £39,485 in the area, compared to the average local first-time buyer price of £112,112, those purchasing a first home in Inverclyde need to borrow just under three times (2.8) the average salary.

The least affordable area in Scotland is Midlothian, just outside Edinburgh, where first-time buyers face an average property price of £238,928 – nearly six times (5.8) average annual earnings in the area.

Older first-time buyers

The average age of a Scottish first-time buyer is now 31 – one year older than a decade ago and a year younger than the UK average (32).