Building society offers new hope to first-time buyers

First-time buyers (FTBs) are an integral part of the housing market, and it is essential they are supported, encouraged and able to borrow sufficient funds to maintain demand in the starter section of the market. Without FTBs there is no underlying upward pressure on the market, prices then become at risk of faltering or even falling, and the housing sector becomes sluggish.

Therefore, the announcement by a major lender that they were bringing out a product aimed at FTBs that doesn’t rely on the bank of mum and dad is an interesting and encouraging development. The Newcastle Building Society has announced that it is offering up to 98 per cent loans with a maximum value of £350,000 to FTBs with deposits as low as £5,000.

This product is aimed at encouraging greater activity in the housing market, supporting buyers who must fully fund their own deposit. This is a group who have recently found it much more difficult to get a mortgage.

Our latest analysis of the FTB market shows prices are rising in many areas but that it is a mixed picture, with many parts of Scotland becoming more affordable while others are racing ahead.

Between July 2024 and June 2025, the average house price for Scottish FTBs rose £5,060, increasing from £153,128 to £158,188.

Across Scotland there were substantial variations in price rises over the 12-month period, with Perth and Kinross recording the highest increase of £15,271; Midlothian rising by £14,126; Renfrewshire up £12,610; Edinburgh increasing by £9,440; and East Dunbartonshire up by £8,635.

There were six areas which recorded a fall in average prices, with South Ayrshire falling £5,616; East Renfrewshire down £4,750; a drop of £4,450 in Moray; Aberdeen lower by £2,346; Aberdeenshire declining by £1,752; and Fife dipping down £27.

The most expensive place to buy for an FTB was Edinburgh at £242,682, while the lowest price was Inverclyde at £96,148.

The difference of £146,534 between the most and least expensive areas in Scotland is quite a substantial figure and highlights greater affordability issues in some areas.

However, nine areas recorded a percentage increase below the 2.4 per cent average annual inflation rate for the timeframe, with a further six areas within 1 per cent point of inflation.

What this tells us is that across large areas of Scotland the cost of buying a home for FTBs has actually either fallen in real terms or increased by only a marginal rate.

The most popular areas are increasing at a pretty substantial rate, with prices for FTBs in Perth and Kinross rising by over £300 a week in the last year.

The importance of maintaining a steady flow of FTBs cannot be underestimated as they are the bedrock supporting the market further up the ladder.

Without FTBs the whole sector is at risk of becoming sluggish, and the wider market could falter in the future.

However, this latest lending offer is an interesting and creative development which seeks to inject vitality into the FTB sector.

Obviously, there are caveats about ensuring appropriate affordability criteria are maintained, but this is a sensible move at a time when the market may be slowing and needs encouragement.