Continued improvement in affordability helped to support first-time buyer (FTB) activity across 2025, analysis by Nationwide has revealed.

The building society found that with price growth being well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased over the past year, which has helped to underpin demand.

Although there has been some improvement in affordability, Nationwide highlighted considerable variation in affordability across occupational groups.

Senior economist at Nationwide, Andrew Harvey, said: "The FTB share of house purchase activity was above the long run average, supported by easier credit availability, with the share of high loan-to-value lending reaching its highest level for over a decade. FTB activity over the last year was around 20% higher than 2024 levels.

"Our main affordability benchmark shows that a prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 32% of their take-home pay – slightly above the long-run average of 30%and well below the recent high of 48% recorded in 1989."

The building society revealed that a 10% deposit on a typical FTB property is now around £23,000, which would take nearly six years to save.

However, this figure varies considerably by region, reflecting differences in average house prices.

Nationwide stated that affordability is most stretched in London and the South of England, while the North and Scotland are deemed as the most affordable.

Harvey added: "Northern Ireland saw a deterioration in affordability due to the strong house price growth experienced over the past year. And, while mortgage payments as a share of take-home pay are a little lower than the UK average, they are now noticeably above the long-run average in the region.

"For the second year running, London saw the largest improvement in affordability, reflecting relatively weak house price growth in 2025, solid earnings growth and lower interest rates. Nevertheless, the capital remains the least affordable region by a significant margin. Affordability pressures remain pronounced in the South of England, whilst in the North, Yorkshire and the Humber and Scotland, mortgage payments as a share of take-home pay are actually slightly below their long-run average.

"Looking ahead, we expect housing market activity to strengthen a little further as affordability continues to improve gradually via income growth outpacing house price growth and a further modest decline in interest rates."

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