Outside the capital first time buyers taking their first step on the property ladder opt for houses rather than flats, says Zoopla.
Research from Zoopla shows first time buyers outside the capital set their sights on purchasing a higher priced three-bedroom house rather than a one or two-bedroom flat.
Two-thirds of home buyers taking their first step on the property ladder look for a house and this increases to 80% when London is removed from the data.
To afford the larger loans first time buyers are taking longer mortgages terms averaging 29-years rather than 25-years of a decade earlier.
People renting one or two-bedroom flats from buy-to-let landlords have the experience of these smaller sized properties and may be ready for a change when they buy their own home.
Homebuyers taking a long term view
Richard Donnell director at Zoopla said, first-time buyers are not compromising on the size and price of a home.
Our analysis suggests that they are taking the long-term view and buying a home with a longer time horizon than they may have done in the past, says Richard.
The following table from Zoopla shows the percentage of first time buyer applicant leads for three and four bedroom homes from January to June 2019.
| Region | Three-bedroom | Four-bedroom |
|---|---|---|
| West Midlands | 60% | 12% |
| East Midlands | 55% | 15% |
| Wales | 55% | 17% |
| Yorkshire and Humber | 53% | 15% |
| Northern Ireland | 52% | 25% |
| North West | 52% | 13% |
| North East | 47% | 14% |
| East | 45% | 14% |
| South West | 44% | 15% |
| South East | 42% | 15% |
| Scotland | 33% | 11% |
| London | 26% | 9% |
The West Midlands leads with 60% looking for properties with three-bedrooms and 12% with four-bedrooms whereas in London due to high house prices this reduces to only 26% and 9% respectively.
Typically larger properties would be purchased by home movers having purchased their first flat as a couple and now moving as their family grows and need more rooms.
It seems that first time buyers purchase larger homes intending to grow into them as average ages are now higher as well as the cost of trading up such as stamp duty, estate agent and solicitor costs.
Deposit remains the largest barrier
The biggest barrier to buying a home is raising the deposit for a larger home although first time buyers are expected to be the largest buying group in 2019 accounting for 36% of sales in 2018.
Even so first time buyers can put down an average deposit of 23% of the home’s value and this has more than doubled from the average 9% before the financial crisis.
These higher deposits could come in part from parents as remortgage buyers can release capital and give this to children for a deposit on their first home.
First time buyers can receive help from other family members such as grandparents as the equity release mortgage buyer can access cash and gift the deposit for a home to grandchildren.
The average property price gap between first time buyers and other buyers has been closing over the past decade from homes that were 20% to 25% cheaper in 2007 to only 8% to 15% cheaper in 2018.
Longer mortgage terms and record low interest rates are helping these buyers afford the repayments for these higher priced properties.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to purchase a new car or even reduce inheritance tax owed by your beneficiaries.
Learn more by using the property value tracker chart, mortgage costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
