More first-time buyers than ever entering into the UK property market
According to new research in the past year, the number of first-time buyers in Britain has increased almost two-fold.
It seems as though some of the government’s schemes, and buyers’ additional ability to save during the pandemic, is starting to pay dividends in the optimistic news. However, sentiment is still downbeat among aspiring purchasers. Currently only a third are confident that they will ever be able to buy their first property.
The Barclays Mortgages’ First Time Buyer Index gives an insight into the market of first-time buyers, by polling over 2,000 potential and existing buyers, its own generated data, and current consumer research.
Despite the last year seeing some of the largest property price increases on record, the number of first-time buyers jumped 98% between 2020 and 2021. In fact, one of the reasons that prices have increased so strongly is likely due to the larger number of new property purchasers entering the market.
The average purchase price for these new owners was £281,900, which is 23% higher than the average purchase price in 2019 of £249,700. However interestingly it is slightly less than the average price in 2020 of £294,500.
According to the research from Barclays the average age of first-time buyers now stands at 32, after taking 8 years of saving to have the deposit ready for their new home.
Whilst most buyers relied on their own savings this is only a small majority at 62%. Additionally, a staggering number (56%) revealed that they wouldn’t have been able to purchase their first property without financial support or deposit contribution from their family.
Saving for a deposit was cited as the biggest obstacle to home ownership by 35%, with more than 70% saying they wished they had started saving earlier.
The biggest difficulty that these buyers face is the ability to save for the deposit on their first purchase. This is primarily as on average their incomes do not facilitate a 90% loan, and therefore they have to save larger deposits to enable purchasing in their local area.
In terms of raw data, the average first-time buyer according to Barclays is 32 years old, purchasing a £281,900 property. The average salary for a sole first-time buyer is £50,800 and the average combined salary for a joint purchase is £70,600. Both of these have increased by around 10% from 2019 to 2021.
They are purchasing with a deposit of £61,100 if they are sole purchasers, or a deposit of £61,000 if purchasing as a couple. This means that the average loan to value is 81%, or in other words, a 19% deposit. In line with the increase in salary above the deposit amount has actually dropped by around £10,000 since 2019, when the average was £71,400.
However, the actual process of purchasing property seems unclear to most first-time buyers with 55% admitting that they did not know where to begin, and 39% didn’t know that solicitor fees had to be paid out of pocket. Almost half hadn’t even considered Stamp Duty, or that they might not have to pay any.
Claire MacPhail, mortgage expert at Barclays, said the figures painted an optimistic picture of the first-time buyer market in Britain since the pandemic.
‘It’s encouraging to see that people have been able to get onto the property ladder in increasing numbers since the start of the pandemic,’ she says. ‘But it’s worrying to hear that many still believe they’ll never be able to afford their first property.
‘Our index points to the importance of first-time buyers being supported by family so it’s essential for lenders to innovate to provide new ways in which first-time buyers can get a head start.
Barclays offers different mortgage options for first-time buyers, including one which allows family or friends to provide 10% of your property price as security, which they’ll then have returned to them with interest.’
In line with the current average price of property in London being more than double the first purchase average at £662,000, the majority of first-time buyers are looking outside of the capital to buy.
This partly also is driven by a change in buyers’ priorities, as more than half of all buyers now stating that a garden is at the top of their priority list for a new home, and of first-time buyers 50% say they want their own outside space.
The enduring popularity of new builds seems likely to stay with the first-time buyer market. As people stretch their budgets, they are keen to find properties that need little or no work.
New build property is still the firm favourite for new purchasers, with many first-time buyers looking for property with no work. This is especially true as deposit amounts are stretched to purchase higher value properties. In fact, only 15% are willing to buy a property that needs a new kitchen or bathroom, and only 2% want to do significant renovation work.