The latest data from reallymoving shows first-time buyer activity is dominating the property market while downsizing is currently in decline.
Mortgage rates may be creeping up again, but despite the many challenges they face, first-time Buyers currently account for 60% of all buyers in the market compared to 54% in April 2023. Their share climbed steadily through the second half of last year to peak in December at 63%, falling back slightly since then but remaining significantly higher than the 5-year average of 54%.
Help for First Time Buyers has been limited and they face multiple affordability challenges, but an overheated rental market is encouraging many people to make the jump to home ownership.
Stiff competition for rental properties and record high rents are a major incentive to try and get on the ladder, and with the Bank of Mum and Dad now helping over a third of First Time Buyers raise a deposit, turning to parents and grandparents for financial support to buy a first home has become the norm.
Reallymoving’s research shows that without the Bank of Mum and Dad, it takes a first-time buyer saving as a single person nearly 6.5 years (76 months) to raise the £25,554 typically needed for a 10% deposit and moving costs including conveyancing, surveying and removals. Those in London need to save for twice has long (8 years and 8 months).
Downsizer activity in decline
Downsizer activity surged during 2022 and 2023, as record high energy bills and the cost-of-living crisis motivated owners of larger properties to reduce their outgoings by moving to smaller homes that are cheaper to run. However, as inflation has eased and a lack of housing supply has made it more difficult to find an onward purchases, downsizers’ market share has decreased significantly from 35% in September 2023 to just 24% in March 2024 – the lowest for more than two years.
The cost of moving home, currently at £14,458 including Stamp Duty, estate agent fees, conveyancing, survey and removals, is also a major factor in their decision making, with continued speculation over whether Stamp Duty could be scrapped for downsizers probably contributing to their growing reluctance to move.
Mortgaged buyers are back
As interest rates rose during 2022 and 2023, the proportion of home purchases funded entirely by cash increased. But since last summer, the proportion of mortgaged buyers has crept steadily upwards, from 72% in July 2023 to reach 83% in March 2023 – the highest level in almost four years.
Many buyers have adjusted to higher rates and greater lender flexibility has helped them improve their affordability by taking out longer term loans. Mortgage product availability, including the volume of higher loan to value loans, is also thriving with the overall choice of residential mortgage products reaching its highest point in over 16 years according to Moneyfacts.
Reallymoving founder and CEO, Rob Houghton, said: “The overall volume of buyers in the market is around 13% lower than the long-term average, as mortgage rate uncertainty has prompted many buyers to sit on their hands and wait. This has caused considerable pent-up demand, particularly with rates creeping back upwards again in the last few weeks, but the long-term trend remains downwards and once the base rate starts falling, we should see that pent-up demand released.
“It’s encouraging to see that First Time Buyers are dominating activity, against the odds finding a way to get onto the housing ladder and begin their home ownership journey. Movement at the lower end of the market enables upsizers to move, which in turn will help boost downsizer activity by increasing the volume of properties available for them to buy.”
