Joint First Time Buyers

A significant trend has emerged amongst those aiming to purchase their first home. As property prices continue to remain high and financial landscapes evolve, the traditional pathway to purchasing a home single-handedly is becoming increasingly challenging. This has led to a growing trend towards collaboration, where individuals are joining forces to step onto the property ladder.

According to a recent analysis, almost two-thirds (63%) of mortgage completions involve joint first-time buyers, indicating a shift towards collaboration in stepping onto the property ladder[1]. This comes as no surprise, also given the notable rise in required deposits over the last decade. The average deposit now stands at £53,414, a striking £21,000 increase from ten years ago.

FINANCIAL LANDSCAPE FOR NEW HOMEOWNERS

According to the analysis, the average salary is higher than it was a decade ago, now £43,257 (+30%). However, getting together a deposit large enough to put down on a first home means raising more than a year’s average pay. Consequently, joint applications have become a strategic move for many first-time buyers.

Despite these hurdles, first-time buyers continue to represent a significant portion of the housing market, accounting for over half of all home loans last year, the highest proportion since 1995. However, it’s noteworthy that the total number of first-time buyers saw a decline of 21% in the previous year, with the average price of homes entering the market at £288,136, marking a 5% decrease from the prior year.

SHIFTS IN HOUSING PREFERENCES

The landscape of starter homes has also evolved, with flats gaining popularity, evidenced by a 6 percentage point increase over the past decade. This shift suggests that new buyers are finding flats to be more accessible options, both financially and availability-wise.

On the flip side, the preference for terraced homes among first-time buyers has seen a decline, further illustrating the changing dynamics within the property market. Despite these changes, terraced homes still accounted for 30% of all new mortgages for first-time buyers last year.

AGE AND AFFORDABILITY CONCERNS

The demographic of first-time buyers is also shifting, with the average age now exceeding 30 years across all UK regions, peaking at an average age of 32. This reflects broader socio-economic trends and the challenges associated with accumulating sufficient funds for a deposit.

Moreover, with the average property value for first-time buyers now approximately 6.7 times the average UK salary, the rationale behind joint mortgage applications becomes even clearer, offering a practical solution to affordability issues.

SUPPORT SCHEMES AND FUTURE PROSPECTS

Thankfully, a range of schemes exists to aid first time buyers, including the mortgage guarantee scheme, which supports up to 95% mortgages and has been extended until June 2025. Other initiatives, such as the First Homes scheme, offer discounts on new build homes, while shared ownership options provide a viable path to homeownership by allowing buyers to purchase a portion of the property and rent the remainder. These support mechanisms are crucial in enabling first-time buyers to navigate the complexities of the property market.

First-time buyers’ journey onto the property ladder is fraught with challenges, from heightened deposit requirements to the evolving landscape of starter homes. However, navigating these hurdles is achievable through strategic joint purchases, leveraging available support schemes and adapting to market trends. For those embarking on this journey, staying informed and exploring all available options is essential.

Don’t forget, our professional friendly advisors are on hand to support you and can help you explore all of your options.

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