What’s driving the surge?

The housing market has always been a critical indicator of economic health in the UK. Over recent months, there has been a noticeable first time buyers increase that has reignited optimism in the property market

Despite challenges like rising property prices and interest rates, first-time buyers are making significant moves, stepping onto the property ladder at an encouraging rate. Let’s explore what’s fuelling this trend and the key factors shaping the landscape.

A Snapshot of the Current Housing Market

The property market in the UK is experiencing dynamic changes, with average house prices continuing to rise. According to recent YouGov data, the average house price now stands at a record high, although monthly fluctuations have been observed. 

A Finder report on First-time buyers statistics UK shows the increase hasn’t deterred first-time buyers, who now make up a growing segment of the market.

The housing market has been buoyed by increased government support in the form of the First Homes Scheme, changes to stamp duty rates, and more competitive mortgage products. While challenges such as mortgage affordability and higher deposit requirements persist, the determination to secure a first home remains strong among buyers.

What’s Driving First-Time Buyer Activity?

Government Initiatives and Stamp Duty Relief

  • First-time buyer stamp duty relief has been a game changer. Under current rules (September 2024) first-time buyers purchasing residential property up to £425,000 are exempt from paying stamp duty. For homes priced up to £625,000, relief applies to the first £425,000. This has significantly reduced the cost of house purchase for many buyers, making the dream of homeownership more accessible.
  • Tools like the stamp duty calculator have also helped buyers understand their potential stamp duty bill, reducing uncertainty during the buying process.

Mortgage Affordability and Competitive Rates

  • Mortgage rates, though higher than in previous years, remain relatively affordable for those with stable incomes and a good credit history. Lenders are offering more flexible products, catering to a wide range of buyers. Some schemes allow buyers to secure a mortgage with as little as a 5% deposit, making it easier to move forward with a house purchase.
  • Mortgage affordability remains a key concern, especially with rising interest rates. However, many buyers are locking in fixed-rate mortgages to shield themselves from potential future increases.

Labour Government’s Proposed Housing Policies

  • The Labour government’s housing strategy plan proposes several changes to stimulate the housing market, including increased funding for affordable housing projects. If implemented, these changes could significantly benefit first-time buyers by addressing housing shortages and stabilising house prices.

Supply and Demand Dynamics

  • The demand for homes continues to outpace supply. In many areas, the number of buyers far exceeds the number of homes for sale. This competitive market encourages buyers to act quickly, despite higher costs.
  • Recent efforts by the government to increase housing stock include grants for small and medium-sized housebuilders and a push for sustainable construction methods.

The Challenges Facing First-Time Buyers

Despite these positive developments, first-time buyers face several obstacles:

  • Rising Property Prices: The average house price has increased significantly, driven by high demand and limited supply. This has led to higher deposits and mortgage repayments, making affordability a pressing issue.
  • Higher Interest Rates: The Bank of England’s base rate increases have pushed mortgage rates higher. Although rates have stabilised in recent months, they are significantly higher than the historically low rates seen in previous years.
  • Deposit Requirements: Saving for a deposit remains one of the biggest hurdles. With rising property prices, even a small percentage deposit can equate to a substantial amount, particularly in high-demand areas like London and the Southeast.
  • Limited Availability of Homes for Sale: A shortage of properties in many regions exacerbates competition among buyers, pushing prices even higher. New housing developments, while helpful, are not keeping pace with demand.

How First-Time Buyers are Adapting

  • Shared Ownership and Help to Buy: Schemes like shared ownership and Help to Buy are proving popular among first-time buyers, particularly those struggling with affordability. These initiatives allow buyers to purchase a share of a property and pay rent on the remaining portion, reducing the upfront cost.
  • Family Assistance: Many buyers rely on financial support from family members to meet deposit requirements. Known as the “Bank of Mum and Dad,” this trend highlights the importance of intergenerational wealth in helping first-time buyers’ step onto the property ladder.
  • Flexible Buying Strategies: Buyers are becoming more flexible, considering properties further afield or in up-and-coming areas where prices are lower. This shift is helping many enter the market despite rising costs.

The Future of the Property Market

The property market’s trajectory remains uncertain, influenced by factors like interest rate changes, economic conditions, and government policies. However, the long-term outlook for first-time buyers is positive, with sustained demand expected to support continued growth in this segment.

Sustainability in Housing

    • A growing emphasis on sustainable construction could help address housing shortages. Initiatives like retrofitting older properties and building energy-efficient homes are gaining traction. Ask about our Sustainable Mortgages.

Capital Gains Tax and Second Homes

    • Changes to capital gains tax rules may discourage investment in second homes, potentially freeing up more properties for first-time buyers. This could ease competition and stabilise property prices.

Continued Support for Buyers

    • Government and private-sector initiatives are likely to evolve to meet the changing needs of buyers. From mortgage affordability programs to targeted tax relief, ongoing support will be crucial in maintaining market momentum.

Greenacre are Here to Help You

The increase in first-time buyer activity is a testament to the resilience and determination of those eager to own a home, despite rising house prices and other challenges. With a combination of government support, favourable stamp duty changes, and innovative mortgage solutions, the property market is becoming more accessible to new buyers.

As the market continues to evolve, first-time buyers must stay informed about changes to stamp duty rates, mortgage affordability, and government schemes. By doing so, they can navigate the complexities of the housing market and make informed decisions that pave the way for a secure future.

Greenacre Financial Services is here to help first-time buyers make sense of it all. Whether you need guidance on calculating your stamp duty bill or finding the best mortgage rates, our expert advisors are on hand to support you at every step of your property journey.

For more information about any of our services, or if you have any questions about first time buyer increase, get in touch or call us on 0203 3939 222.

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Hannah D
Hannah D
07:42 09 Sep 19
I would fully recommend Greg and Greenacre Financial Services. As a first time buyer I was daunted by the process of... finding the right mortgage for me however Greg made the process really simple, clear and quick. He was always available to answer any questions and happy to explain everything. I wouldn’t hesitate in recommending Greenacre FS to my friends and family.read more
Jessica Cohen
Jessica Cohen
19:33 26 Aug 19
We first met with Greg in May for advice as we had adverse credit and irregular pay and didn't think a mortgage was in... our reach. Less than two weeks later Greg had fully arranged a great deal for us on our first mortgage. He was available whenever we needed him, 7 days a week and in the evenings. We cannot thank Greg enough for helping us buy our first home!read more
Seren Fletcher
Seren Fletcher
08:56 24 Aug 19
Would highly recommend Greg and Greenacre Financial Services. Was extremely professional and helpful. Our mortgage... wasn’t straight forward due to my husband being self employed but Greg was very knowledgable and managed to find us a really good mortgage. Looking forward to working with him again in the futureread more
Kane
Kane
13:24 23 Aug 19
Graham at Greenacre was excellent in helping me get a mortgage for my house purchase. He was always available when... needed, provided an efficient service and was very knowledgeable. Highly recommended!read more
Ian Hatter
Ian Hatter
11:07 16 Aug 19
What can I say, Greg has been absolutely amazing in sorting out a mortgage for me I never thought was possible. It has... meant I have been able to buy a house, a few months ago, I would never have dreamed of being able to buy after talking to high street lenders. He worked exceptionally hard and always kept me updated with every step of the process. Buying a house is extremely stressful, but Greg took all that stress away from me. I cannot recommend Greg enough to anyone looking to buy a property. Thank you so much for your help Greg, it's greatly appreciated.read more
Sean Kelly
Sean Kelly
15:27 30 Jul 19
10/10 EXCEPTIONAL service and result. Highly recommend. Greg and the Greenacre Financial Services team were fast,... knowledgeable, and honest. All the qualities you want and need. Very pleased I was recommended to Greenacre. Customer for life!read more
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