Number of First-Time Buyers Drops in the UK

The number of UK first-time buyers has dropped by a fifth, according to the latest data from Halifax.

Between January and August 2023, the market saw a 22% drop in first-time buyers compared to the same time in the previous year. However, first-time buyers still accounted for 53% of all agreed home mortgages in that timeframe, up from the last year by 1%.

The director of Halifax Mortgages, Kim Kinnaird, also shared that the average age of people purchasing their first properties had risen to 32 over the previous 10 years.

Read on to see how this will affect property investment opportunities in 2023.

In a different report from Rightmove, the property portal showed that homes needing renovations were in demand among buyers. These properties are also 8% cheaper than the average home on the market.

In contrast, refurbished homes command a 19% premium, translating to £70,000.

Other popular properties include:

• Homes with updated boilers
• Homes with double-glazing
• Properties with loft conversions and additional storage
• Homes close to train stations
• Homes with gardens
• Chain-free homes

The same report shows that rents are most attracted to homes with smart tech, double glazing and within walking distance of a train station.

These figures show that the current cost-of-living crisis affects investor and tenant decisions, keeping one eye on gas and electric prices.

In addition, the government recently postponed their EPC requirements – changes that would have seen landlords improve their property EPC rating to ‘C’ by 2025 for new tenants.

These regulations may have caused the popularity of properties with updated boilers and double glazing, but have now been pushed back indefinitely. 

Another study showed that 70% of renters want to live in energy-efficient homes, which correlates with the popularity of such properties in the first eight months of this year.

Read our North West Regeneration guide for the latest sustainability and EPC developments.

The Halifax report shows that the south-east of England suffered the most significant decline in people purchasing their first property, down 25%. This was followed by London and East Anglia, which were down 24%.

There are numerous reasons why this may be the case:

Firstly, the South East and London require some of the highest deposits in the UK. For instance, London deposits are around £113,078. In comparison, the UK average deposit is only £54,116, which is 19% of the average house price.

Property prices are also much higher in these areas – London’s average house price is £527,979 per the UK House Price Index.

Investors are looking for cheaper locations to purchase property. As such, they are looking to different areas to offset higher mortgage rates on the investment purchases. Consider reading our recent guide to learn more about the best places to invest in property.

For instance, Liverpool’s average property price is around £177,000. Therefore, the average deposit (based on the 19% figure) would be £33,630.

According to a 2022 Hamptons report, off-plan property sales were high in areas with attractive rental yields, such as new developments in Liverpool City Centre and Manchester, where yields sit around 7 – 10% – well above the UK average of 5.19%.

Last year, 67% of off-plan homes were purchased by first-time buyers. With supply down, these buyers turned to off-plan property investments to save money compared to complete properties.

With supply issues still plaguing the property market, off-plan investment offers a strong alternative for first-time buyers who want to own a property sooner rather than later.

If you are interested in buying off-plan property, RWinvest has extensive guides covering the latest insights and analysis.