- First-time buyers purchased 33% of homes sold in Great Britain so far this year
- For the first time, half of homes in London were purchased by a first-time buyers
- Hamptons say 363,000 new homeowners may buy in 2024, the most since 2019
First-time buyers are out in force this year, according to research by Hamptons, purchasing one third of homes sold so far in 2024.
The property firm revealed that first-time buyers have been behind 33 per cent of purchases in the UK this year, an all-time high.
It is a sharp increase compared to 29 per cent in 2023 and just 17 per cent in 2014.
The increase has been driven by first-time buyers in the South of England.
For the first time, half of homes in London were bought by first-time buyers this year, up from 41 per cent in 2023 and 28 per cent a decade ago.
But the top target for first-time buyers appears to be Slough in Berkshire, where a huge 89 per cent of homes are sold to them.
Analysts at Hamptons claim that if first-time buyer purchases continued at this rate, there would be 363,000 new homeowners across the UK this year – the highest number since 2009.
The research is based on sales by estate agents in the Countrywide network, which consists of over 60 high street brands across the UK of which Hamptons is one.
Why are there more first-time buyers?
It is thought that cheaper mortgages and falling inflation have helped those who couldn’t afford to buy last year to get on the ladder.
The cheapest mortgage rates have fallen, settling between 4 and 5 per cent, and many people’s incomes have also risen.
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While the cost of living has also risen, house prices still remain slightly down on their summer 2022 peak, making them seem more affordable.
It is also thought that rising rents will have pushed some tenants who can afford to buy to do so.
Aneisha Beveridge, head of research at Hamptons, said: ‘In a bid to escape the heated rental market, first-time buyers have dominated the sales market this year, making up a record third of all purchasers.
‘This unprecedented move comes despite a limited package of Government support measures.
‘Instead, with high mortgage rates curtailing their ability to borrow, most are compromising on a smaller home to get a foot onto the housing ladder.
‘The market continues to be dominated by those who can afford to buy, rather than those who want to.
‘And the pickup in first-time buyers this year is in part, making up for the lost moves in 2023.’
‘Longer-term, in a similar fashion to post-2008 when the removal of high loan-to-value lending put purchases out of reach for many, unless rates fall markedly, homeownership will be restricted to the most affluent households, reversing the decade-long increase in first-time buyer purchases.’
Why are there so many first-time buyers in London?
Given that London is home to the most expensive properties in the UK, this may come as a surprise to many.
That said, London has seen some of the biggest rent rises over the last few years, which may be encouraging more renters to become homeowners.
House prices in London have also underperformed the most of the UK for much of the last decade. The average price of a flat in London has barely moved since 2016.
London first-time buyers also seem prepared to compromise on space and location, as higher mortgage rates limit how much they can borrow.
This is suggested in the data by the fact they are buying cheaper homes than before.
This year, the typical London first-time buyer spent £108,710 less on their property than they did in 2020 when mortgage rates were more affordable.
The top town for first-time buyers is… Slough
Overall, there were 19 local authorities across the UK where first-time buyers made up over half of all buyers this year.
Fifteen of these were in the South of England, and seven were in London.
A decade ago, Slough was the only local authority where over half of homes were bought by a first-time buyer.
But now it is joined by London boroughs such as Wandsworth, Brent and Greenwich, as well as Reigate and Banstead in Surrey, Braintree in Essex and Coventry.
The South East, the second most expensive region in the country, also saw a 9 per cent year-on-year increase in the share of homes bought by first-time buyers.
They purchased 34 per cent of homes sold in the region this year, more than double the proportion in 2014.
Wales and the North East were the only regions where the share of first-time buyer purchases fell since last year.
These are some of the most affordable areas to buy a home in the UK, so improving affordability conditions have had a smaller impact.
First-time buyers are buying smaller homes
In a bid to escape the costly rental market, first-time buyers are purchasing smaller homes, according to the analysis by Hamptons.
For the first time since 2011, more than half of first-time buyers purchased a home with one or two bedrooms.
Last year, 49 per cent bought two-bed homes or smaller, while the majority of new homeowners bought a larger home.
Similarly, 28 per cent of first-time buyers purchased a flat this year, up from a recent low of 24 per cent in 2022 when the post-Covid race for space was in full swing.
Hamptons estimates that first-time buyers will spend £3bn less on their first homes this year than in 2021, while paying £796m more in mortgage repayments during their first year of ownership due to higher rates.
A typical first-time buyer with a 10 per cent deposit mortgage taken over 30 years will pay £13,977 in the first year in 2024.
That is £1,524 more than they would have paid in 2021 for a larger home.
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