The Conservatives were elected on a promise to "double the number of first-time buyers". Our analysis shows the government must reach 600,000 first-time buyers per year by 2020 to fulfil their promise. As the Conservatives seek to present themselves as 'the party of homeownership', they must take radical action to meet the aspirations of first-time buyers.
As David Cameron settles in to his second term as prime minister, he finds himself with a dilemma. Homeownership has become a central theme of the Conservatives' agenda, but homeownership rates were in continuous decline throughout Cameron's first five years of premiership. PricedOut’s analysis shows 1.26m additional people were locked out of homeownership and stuck renting due to house prices rising faster than earnings in the five years of the Coalition.
The Conservatives made housing one of the six key themes for their election campaign. Their manifesto stated the following:
We will double the number of first-time buyers, and help more people own their own home.
We are setting an ambition to double the number of first-time buyers compared to the last five years – helping one million more people to own their own home.
Upon winning the election, the re-elected prime minister stated, “our manifesto is a manifesto for working people and as a majority government we will be able to deliver all of it”. PricedOut therefore expects the Conservatives to fulfil their commitment to double first-time buyers. We will be paying close attention to the figures to ensure the government keeps its promise.
Before 2002, there were generally 400,000 to 600,000 first-time buyers per year. First-time buyers dropped below 400,000 in 2003, the same year that the average house price shot up by more than the average annual salary. This same year represented a turning point in the rate of homeownership, which has declined to 63%.
Using this data we can work out what ‘double the number of first-time buyers’ really is. Assuming the new government will be in place full a full five-year term, it is reasonable to look at the previous five years as the term over which first-time buyer number should be doubled. However the previous five year period saw a slight early decline followed by significant growth and it is nonsensical to expect the new government to directly copy this pattern. It is therefore sensible to look at the trend in first-time numbers that should be achieved in order to set a realistic numerical target.
From this exercise we can see that the government should be aiming for there to be 600,000 first-time buyers in 2019 in order to fulfil the Conservatives’ pledge. Overall this would mean 1.19 million additional first-time buyers, aligning with the manifesto commitment of “one million more people to own their own home”.