A report by Hamptons has revealed that a staggering one-third of all homes sold this year have been snapped up by first-time buyers, with this figure rocketing to half in London. This marks a historic moment for the UK, showing an all-time high and signifying a substantial shift in the property market.

The data speaks volumes about the current state of the housing market. First-time buyers are making significant waves, accounting for 33% of all home purchases across the UK in 2024, a notable rise from 29% in 2023 and a mere 17% back in 2014. This trend is especially pronounced in the South of England and has reached a peak in London where, for the first time ever, half of the homes have been bought by those taking their first step onto the property ladder.

The Spotlight on Slough

Slough, in Berkshire, has emerged as a hotspot for first-time buyers, with an astonishing 89% of homes in the area being purchased by newcomers to the market. This trend highlights the shifting dynamics and where the demand is strongest among first-time buyers.

What’s Behind the Boom?

The rise in first-time buyers can be attributed to several key factors:

• Favourable Mortgage Rates: A dip in mortgage rates to between 4 and 5%, combined with rising incomes, has made homeownership more accessible for many.
• Affordable Housing Prices: Despite a general increase in the cost of living, housing prices have remained slightly below their peak in summer 2022, presenting a more affordable opportunity for buyers.
• Rising Rents: The push towards homeownership is also driven by skyrocketing rental prices, encouraging tenants who can afford to buy to make the leap.

Aneisha Beveridge, head of research at Hamptons, points out that the drive among first-time buyers to escape the heated rental market has led to them dominating the sales market this year. This comes despite limited governmental support, suggesting a robust desire and need to own property amidst challenging economic conditions.

London’s Unique Market

The rise in first-time buyers in London, a city known for its sky-high property prices, may seem counterintuitive. However, factors such as significant rent increases and the relative underperformance of house prices in the capital have spurred renters to become homeowners. First-time buyers in London are also showing a willingness to compromise on space and location, further facilitated by a decrease in the average spend on properties compared to previous years.

The Trend Across the UK

Beyond London, the South East has seen a 9% year-on-year increase in the share of homes bought by first-time buyers, with 34% of homes in the region sold to them in 2024. However, it’s important to note that in areas like Wales and the North East, where homes are more affordable, the share of first-time buyer purchases has actually fallen, suggesting that the impact of improving affordability conditions varies regionally.

Adjusting Expectations and Homes

In pursuit of homeownership, first-time buyers are adjusting their expectations, with more than half opting for homes with one or two bedrooms, marking a shift towards smaller, more affordable properties. This trend indicates a significant adaptation in response to the challenges of entering the housing market, with first-time buyers spending less on their initial home purchases but facing higher mortgage repayments due to the prevailing rates.