Recent Zoopla reports stating that first-time buyers are deciding against purchasing one-bedroom flats came as no surprise to me, or I’m sure anyone else working in the industry.
The report stated that two thirds of FTBs are now aiming to purchase a house rather than a flat, and most aspire to purchase a three-bed.
With the average first-time buyer in the UK now being 33 years old, according to ONS, it seems only natural that they’re interested in purchasing larger properties that they see themselves living in for longer rather than a first-step home which will often only be suitable for a couple of years.
Although this is not surprising, it is in fact a relatively new trend. Looking back just ten years, the journey for first-time buyers, and all home owners, were much more predictable.
First-time buyers would start with a smaller home and then move on to a bigger place as their circumstances changed and their income steadily grew.
Along with the age of first-time buyers having increased, across the last decade first-time buyers are also now more likely to be a couple, and 37% also now have children.
It is likely to be more affordable and manageable to commit to a mortgage as a couple and buy a property together, which is likely one of the reasons why we are seeing more couples buying their first property together.
Considering it now also takes on average nearly four years to save for a deposit, it’s no surprise to see that first-time buyers are not putting their life on hold until they’re on the property ladder either.
That being said, the time it takes to save for a deposit has in fact decreased as despite it still being nearly four years, we are seeing more and more first-time buyers turn to the bank of mum and dad to help with purchasing a property. A lump sum from parents will significantly reduce the time needed to save.
It is not surprising to see first-time buyers turn to the bank of mum and dad to get on the property ladder and away from private renting. Rents have increased this year, and there are also reports that there is likely to be a 3% rise in rental costs per year over the next five years.
The increase in rental costs are meaning that renters are having to weigh up which is going to be more affordable in the long-term.
In spite of it currently being a favourable time to purchase property, first-time buyers are still struggling with the initial deposit, if they do have help from family, and the all-important house-to-price-earnings affordability ratio.
Earlier this year, Legal & General released figures outlining that the average parental contribution for homebuyers is now over £24,000, and collectively parents have given £6.3 billion, meaning that the bank of mum and dad would rank as the 10th largest mortgage lender, if it were one.
Recent reports have also outlined the issue that first-time buyers perceive the process of organising and getting approved for a mortgage as a challenge.
Having worked within the property industry for over twelve years I have, for many years now, been lucky enough to receive the best advice and knowledge when it comes to property and mortgages.
So, the idea that first-time buyers currently see the mortgage process as a barrier to owning their first home is disappointing.
As experts within the industry, it is our duty to be educating future first-time buyers, from a younger age, about the basics of mortgages, what you need to provide to get a mortgage, understanding what lending is based on and how you can improve your chances of getting approved.
*Ellie Donaghy is head of lettings at Andrews Property Group