In Britain, first-time buyers have bought a record-setting 33% of homes this year, a noticeable increase from last year’s 29%, according to data from Hamptons.
This rate, if it holds, will be the highest on record, especially compared to ten years ago when it was only 17%.
Hamptons points to the abundance of high loan-to-value mortgages and low-interest rates, alongside tougher regulations on buy-to-let investments, as the reasons for this uptick.
Aneisha Beveridge, the head of research at Hamptons, highlights that first-time buyers are taking over the sales market to avoid competitive rental conditions, representing a third of all home purchases. This surge comes despite limited help from government support schemes. However, with high mortgage rates limiting borrowing capabilities, these new buyers often settle for smaller homes to enter the housing market.
Beveridge notes that the housing market is primarily accessible to those with financial means rather than everyone who desires to buy a home. This year’s rise in first-time buyer activity is somewhat compensating for the reduced number of transactions in 2023.
She warns that unless mortgage rates significantly drop, similar to the period after 2008 when the lack of high loan-to-value lending made buying a home unattainable for many, homeownership will become exclusive to wealthier households, reversing the growth in first-time buyer purchases over the last ten years.
London experienced the most significant rise in first-time buyer activity, with half of all homes sold this year being bought by them, amounting to a 9% increase from 41% last year and a significant jump from 28% a decade ago.
