Study shows they constitute over 25% of the housing market in 2023
Seven in 10 first-time buyers are willing to make compromises to step onto the property ladder, research from Skipton Building Society has revealed.
The survey of 1,000 adults planning to purchase their first home within the next three years showed that among the things first-time buyers are ready to sacrifice are the size of the garden, location, and the number of bedrooms.
The findings indicate that 42% of respondents are open to having a smaller garden in exchange for the opportunity to purchase a home. Additionally, 37% are willing to compromise on the preferred location. It also appears that practical considerations are at the forefront of their decision-making, as 67% expect their first home to be on the smaller side.
Internal data from the Skipton Group, which includes Skipton Building Society and Hamptons Estate Agents, underscores the significance of first-time buyers in the housing market. In 2023, first-time buyers accounted for over a quarter of all property transactions, marking a steady increase from 16% in 2015. Despite challenges such as the pandemic, economic downturn, and market conditions, their share has grown by 5% since 2020.
“First-time buyers who have been able to successfully navigate 2023’s higher interest rates have increasingly found themselves at the front of the home-hunting queue,” commented Aneisha Beveridge, head of research at Hamptons.
“With nothing to sell in what’s been a tough market, those buying their first home are being favoured over offers from anyone with somewhere to sell, often even when their offer is a little lower. This means they’re getting more home for their money than they were last year, particularly if they’ve got a healthy deposit.
“New buyers have been driven into the market by rapidly rising rents which are making the increases in mortgage rates look more palatable. However, with mortgage rates forecast to continue falling, movers will probably return in more meaningful numbers in 2024.”
The study, conducted by OnePoll, also revealed that 34% of respondents anticipate owning a semi-detached property, with flats (25%) and terraced houses (21%) following. Notably, those purchasing in London are more likely to opt for a flat (38%) than a semi-detached property (26%).
The research also suggests an increased buying power among younger house hunters, with the average household income witnessing a 14% rise.
“Due to the significant changes in the market this year and escalating rents, we’ve seen many first-time buyers become more realistic than optimistic with what they can afford and adjust property expectations,” said Charlotte Harrison (pictured), chief executive of home financing at Skipton Building Society.
“With many buyers realising it’s better to step onto the property ladder with a smaller starting point of a property than hanging onto the idea of waiting to own something much bigger, especially if they’re paying escalating rents.
“That being said, people trapped in renting remains one of the UK’s biggest housing challenges, with increasing rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – making it almost impossible for people get onto the property ladder.”
Harrison, however, pointed out that there are a wide range of options to help first-time buyers, even for those feeling trapped in the rental cycle.
“We’d encourage all those who aspire to buy their own home in 2024 to look at the wide range of options available to help them, as the first step onto the property ladder may be closer than they think,” she added.
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