For first-time buyers, their first purchase used to be a stepping stone on the property ladder, but more recently it’s been a giant leap – and one that some buyers have struggled to make.
The consequence is that, rather than getting on the ladder early, many are saving longer and buying later, and that is changing what they are after. Yet opportunities remain across the market.
Flats, once the first step to property ownership for many first-time buyers, have lagged other property types, with more than two-thirds of one and bedroom flats listed this year still unsold, according to Zoopla’s June House Price Index. This is a continuation of a long-running trend.
The price gap between flats and houses in most areas is substantial, remaining at a 30-year high. Average house values are 1.7 times the price of a flat in the UK or 2.7 times excluding London.
Outside of the capital, more than half (52%) of buyers want a three-bedroom house, up from 44% in 2017 according to Zoopla. However, in the capital itself the price of properties, as well as the pressure of space, mean that flats are in greater demand than many other areas of the country, with seven in ten London first-time buyers seeking a flat.
So why the gap?
Running costs
For some, the desire for a house comes as they try to avoid the added running costs of flats, such as service charges and ground rent. There are, however, steps by the government to revamp this system with the Commonhold and Leasehold Reform Bill - which would cap ground rents and ban the sale of new leasehold flats - expected, to be introduced to Parliament in Autumn 2026.
Affordability
Affordability also plays a role, especially by region. In areas such as the Midlands and the north the affordability of houses means that many first-time buyers simply bypass flats and move straight to houses while in London high prices mean little choice but to opt for a flat first.
Increasing age of FTB
Another factor is the increasing age of first-time buyers. A report by the Institute for Fiscal Studies, published earlier this year, showed that the share of 25-to-34-year-olds still living with their parents rather than renting or buying somewhere of their own has increased by more than a third in nearly two decades. For many, this will be part of a plan to save more for deposits.
Planning ahead
The fact that they are buying later means they are more likely to target family homes, with research from Barclays Property Insights suggesting that more than a fifth of millennials, aged between 28 and 43, bought properties with more bedrooms than they currently needed.
The desire for a forever home is evident among younger buyers too, with 33% of Gen Z buyers, aged 18 to 27, opting for a forever home to avoid moving, according to the Barclays research.
Better market conditions
Market conditions for first-time buyers are also better than 18 months ago, with a wider choice of homes for sale, lower mortgage rates and sellers motivated to negotiate on price. Couple that with improved financial education and relaxed affordability criteria and their first home becomes even more accessible for first-time buyers, whatever type of property they choose to buy.
For more information on how we can assist you on your sales journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
