Zoopla: First-time buyer homes selling at 8% below local average

Properties favoured by first-time buyers are typically selling for an average of 8% or £20,300 below the local market average, Zoopla analysis suggests.

Research suggests the average price of a typical home purchased by a first-time buyer (FTB) is £244,100, compared with £264,400 across all properties.

This is despite first-time buyers purchasing a property at an increase of £2,800 (1.2%) compared with a year ago, Zoopla said.

The discount is as much as 26% in areas such as London.

Even higher mortgage rates haven’t made a large dent in the discounts available. 

The average first-time buyer is paying mortgage bills that are 27% - or £213 per month - higher than if they’d purchased their home in the fourth quarter of 2022. The average £990 per month figure is still lower than the UK average rent of £1,221 per month, proving that deposits remain a barrier to entry for many would-be buyers, Zoopla said.

Traditionally, many FTBs would look for a smaller home in order to get on to the property ladder with a view to upsizing in future. This has been the case in London, where 66% of first-time buyers are enquiring about flats, up from 63% a year ago. Similarly, Scottish FTBs are also now more interested in flats compared to 2022, Zoopla's research found.

However, the average age of a first-time buyer in the UK is 33, which means many may be buying with family needs in mind. In fact, nearly twice as many first-time buyers now have dependent children, compared with the pre-2007 financial crisis period. 

As a result, terraced homes are one of the most affordable and sought-after options for those looking to buy a family-sized home, the research found.

This is particularly true for southern England where more than a third (37%) of enquiries are for terraced homes, compared with one in four (43%) in the North and 46% in Wales. In the Midlands, classic three-bed semi-detached homes are the most popular choice for first-time buyers where prices have remained flat to 2022.

The analysis found that only 27% of first-time buyers are looking for their first home 10 miles or more from where they’re currently living, down from 29% a year ago as the number of homes on the market increased. Morethan half (55%) enquire about homes within a 5-mile radius from where they are based, Zoopla said, which is a bigger proportion than other buyer group (48%). FTBs are more likely to look for a home more than 10 miles away in southern England where affordability is a bigger barrier.

Izabella Lubowiecka, senior property researcher at Zoopla, said: “We expect more first-time buyers to come to market in 2024, particularly in the second half of the year thanks to a combination of reduced mortgage rates, earnings growth and improved affordability. 

“But the reality is that many would-be buyers might be able to get on the ladder now by considering different property types or alternative locations that offer better value for money. First-time buyers are in a stronger position in the current buyer’s market so we encourage them to be resourceful and assess all the options available to them.”