A fresh profile of first-time home buyers in 2023 has emerged, shedding light on shifting trends that could be of interest to landlords seeking to understand their target market.
Over the past decade, homebuying patterns have undergone substantial changes, with several key characteristics of a typical first-time buyer undergoing transformation. The new breed of property purchasers is older, having spent more time in rental accommodations or with their parents, and they face the challenge of accumulating larger deposits.
Rising house prices in the UK over recent years prompted government intervention to support first-time home buyers through various schemes and incentives, such as the Help to Buy ISA, shared ownership initiatives, and reduced stamp duty rates aimed at easing entry into the housing market.
To some degree, these measures have yielded positive results, with first-time buyers now representing a larger share (52%) of the total buyer pool when considering mortgage statistics, according to recent data from confused.com. This marks a significant increase from the 40% recorded in 2012.
A Glimpse into Today’s First-Time Buyer
Confused.com has meticulously examined data from multiple sources to uncover the defining characteristics of today’s first-time home buyers. The average age of these buyers has risen to 32, up from 30 in 2012, and they typically earn an annual income of around £34,000.
In the latest available data from 2022, the average deposit paid by first-time buyers amounts to £62,470, equivalent to 21% of the average purchase price of £302,010. This figure reflects an 8% increase compared to 2021, underscoring the substantial growth in property prices during this period.
However, it’s important to note that these figures are influenced by London, where first-time buyers grapple with an average deposit of £125,378. In contrast, buyers in the North East contributed £30,198 towards their property purchases in the previous year, while those in the North West paid £37,483.
Interestingly, a majority (57%) of first-time mortgage applicants in the preceding year were joint applicants, purchasing property with another person, while the remaining 43% embarked on the homeownership journey solo. Surprisingly, only 21% of first-time buyers had children, indicating a prevalent trend of individuals waiting to secure a property before starting families.
Despite the higher property prices, the South East saw the largest number (73,588) of first-time buyers in 2022, followed by London with 48,390, and the North West with 37,534.
Insight into the Rental Market
With approximately one-fifth of all UK households residing in privately rented accommodations, it appears that the majority of individuals first experience life as renters before transitioning to homeownership.
While affordability is an evident concern for many prospective buyers, the private rented sector appeals to those seeking greater flexibility or desiring to live in more desirable locations, possibly with a group of friends, than they would affordably manage by purchasing a property.
The quality and standard of rental offerings in the UK continue to improve, with emerging sectors like build-to-rent providing tenants with enhanced amenities and lifestyle-focused living environments. Additionally, more investors are renting out newer or more modern properties due to evolving EPC (Energy Performance Certificate) regulations in the sector.
This data from confused.com serves as a valuable tool for analysing target tenant demographics. Notably, London boasts the highest average age for first-time property buyers at 33, suggesting that landlords in the city may cater to a slightly older tenant market.
With robust demand across the private rented sector and an undersupply of housing in both the buyer’s and rental markets, buy-to-let landlords play a critical role in meeting the housing needs of the many tenants searching for homes. In this landscape, their contribution remains more essential than ever.