First-time buyers (FTB) are expected to remain the largest purchasing group in the property market this year despite a shift in their buying preferences.
FTB sales are predicted to overtake the 36% market share in property transactions during 2018 according to research by Zoopla.
Sidestepping smaller one-bedroom and two-bedroom apartments or flats, over two thirds of first-time buyers are targeting houses as their first step onto the property ladder.
This demand for larger homes rises to 80% outside of London and the South East.
In 2007, first-time buyers were purchasing homes around 20% to 25% cheaper than the average property price.
However, in 2018, FTBs were purchasing homes 8% to 15% cheaper than the average, suggesting that they are looking for more longevity from their first home.
The increase of Help to Buy and the average mortgage length rising from 25 years a decade ago to 29 years in 2018 is allowing FTBs more flexibility in the properties they are able to afford.
The costs of moving and stamp duty land tax attributed to second stepper home moves has also encouraged more FTBs to stretch their initial budget in order to maximise the time they are able to spend in their first home.
Increased affordability lending criteria has also meant fewer lower income buyers are approved for mortgage products in the modern market. Buyers having to prove they can afford a property at an interest rate of 7% as opposed to the current 2.2% means that an average household income needs to be £36,000 per year before they are able to secure a mortgage.
Furthermore, buyers are now doubling the average 9% deposit used to purchase a property before the financial crisis in 2007. The average deposit is now 23% of the property value with Equity Loans helping to make up the difference in many cases.
Overall, 52% of Northern Irish FTBs are looking to purchase a three-bedroom property with a quarter looking for four-bedroom homes.
At least 40% of FTBs in every area of England, excluding London, were looking for larger homes as opposed to more traditional, smaller and cheaper accommodation options.
Richard Donnell, Research and Insight Director at Zoopla, said:
“First-time buyers are not compromising on the size and price of a home.
“Our analysis suggests that they are taking the long-term view and buying a home with a longer time horizon than they may have done in the past.”
Is this trend likely to increase in the future? Have you found fewer FTBs looking to purchase smaller homes?
