First-time buyers are securing their first homes at prices around 8% below the local averages, according to the latest insights from Zoopla, a leading property portal.
They are making their entry into homeownership with an average purchase price of £244,100, which is £20,300 less than the local market averages. The savings are even more pronounced in London, where the difference jumps to £137,800 or 26% below the average.
Zoopla’s analysis, which draws on the latest and exclusive data on thousands of first-time buyers, reveals that despite an overall year-on-year price increase of £2,800 (1.2%) for first-time buyer properties, significant savings can be made, especially in regions that witnessed substantial value increases during the pandemic, such as the South West. For example, first-time buyers in Truro, Cornwall, and Dorchester, Dorset, are finding homes at 39% below the local market averages, marking the UK’s largest discounts for this group.
Regional Breakdown
- London: First-time buyers are finding homes at an average of £399,000, which is £137,800 less than the average home price.
- South East & South West: Savings of £65,000 and £72,200 respectively, with discounts of up to -23% in the South West.
- East Midlands & West Midlands: Over £17,000 and £32,500 in savings, respectively.
- Wales, North West, Yorkshire, & the Humber: Each region offers significant discounts, with savings often exceeding £28,000.
Interestingly, Scotland stands out as the only region where the discount margin is virtually non-existent, highlighting regional variances in the housing market dynamics.
The Financial Picture for New Homeowners
Despite rising mortgage rates in 2023, first-time buyers are finding the silver lining. The average mortgage bill for a first-time buyer has surged by 27% or £213 per month compared to the last quarter of 2022. However, with an average monthly mortgage payment of £990, homeownership remains more affordable than renting, with the average UK rent sitting at £1,221 per month. This points to the persistent challenge of accumulating a deposit as the primary barrier to entry for many prospective buyers.
The Shift in Buyer Preferences
The profile and preferences of first-time buyers are also evolving. In London, for example, 66% of first-time buyer inquiries are for flats, a slight increase from the previous year. This trend is mirrored in Scotland, indicating a strategic shift towards more affordable, potentially smaller property types as a stepping stone into the market.
The average age of a first-time buyer in the UK now stands at 33, suggesting that many are considering their future family needs from the outset.
Looking Ahead
Izabella Lubowiecka, a senior property researcher at Zoopla, predicts a more vibrant market for first-time buyers in the second half of 2024, “We expect more first-time buyers to come to market in 2024, particularly in the second half of the year thanks to a combination of reduced mortgage rates, earnings growth and improved affordability. But the reality is that many would-be buyers might be able to get on the ladder now by considering different property types or alternative locations that offer better value for money. First-time buyers are in a stronger position in the current buyer’s market so we encourage them to be resourceful and assess all the options available to them.”