FTBs retain largest market share in 2019

First-time buyers (FTBs) will continue to be the largest home buyer group in the UK over 2019, accounting for 36 per cent of residential property sales, data published by Zoopla revealed.

According to the property website’s report, the weaker growth in FTB volumes in London and the South East over the next 18 months will be off-set by continued growth in regional markets.

The published findings indicated that FTBs are now taking a longer-term view, typically seeking three-bedroom properties that they can live in for longer. The online property advertiser added that there is no evidence of FTBs rushing into purchasing smaller, lower value homes in order to force their way onto the property ladder.

Furthermore, tougher mortgage regulation introduced in 2014 mean that FTBs in London now need a household income of £92,000 per year to purchase a two-bedroom home to pass mortgage affordability tests, when a stressed rate is applied, and £53,000 under normal circumstances to pay a mortgage product rate of 2.4 per cent.

When looking at the rest of the UK, the difference is smaller and the hurdles FTBs have to leap are smaller. The mortgage product rate requires an annual salary of £20,000 as opposed to £36,000 at the stressed rate.

Commenting on the findings, Zoopla research and insight director Richard Donnell said: “First-time buyers have been the driving force behind the housing sales market in recent years. Lower mortgage rates and improving mortgage availability have supported the growth in FTB numbers across the country.

“Despite increased barriers from high house prices in southern England and mortgage regulations, the appetite to buy their first home remains strong. Whilst the outlook is more challenging in London, growth in FTB volumes is expected to be driven in regional markets where affordability remains attractive, supported by greater availability of higher loan to value mortgages.”

Today, the average price of homes bought by FTBs outside London is just 8 per cent lower than the regional average. Between 1996 and 2007, FTBs bought homes that were priced at 20 per cent less than the regional average.

Donnell concluded: “The greatest potential for further growth in first-time buyer numbers is in the North West and Scotland, where growth has been most robust recently. Changes to the Help to Buy scheme in England from 2021 could have an impact on the 14% of FTBs using this scheme to buy their first home. However, the impact could be off-set by higher loan to value lending and newer forms of tenure such as shared ownership.

“First-time buyers will be the largest buyer group this year and there is no evidence that the long run appetite for home ownership will diminish any time soon.”

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