First-Time Buyers’ Stance Amid Fluctuating Housing Market

As we have all come to acknowledge, the housing market is in flux, with many first-time buyers struggling to get their foot on the first rung of the property ladder. Whether these potential homeowners are looking for a rental agreement or buying outright, an inflated market is making life exceedingly difficult for those scouring the housing landscape.

With the cost of living meaning a tighter squeeze on financial decisions and lifestyle choices, young people, in particular, are feeling the higher temperatures of the current housing climate.

House Prices Continue to Fall

The March 2023 RICS UK Residential Survey outcomes illustrate a frail market environment. According to this survey, house prices are still declining at a national level, which may be somewhat of a worry to current property owners; however, this will surely instil a sense of hope for first-time buyers looking to get their foot on the initial rung of the property ladder.

“House prices continue to dip, evidenced by a headline net balance of -43% of respondents reporting a decline in the latest results…”

RICS report that although this seems to be a clear pattern of a continuing downfall in house prices, the above figure of -43% is actually more positive than the most recent edition of this survey, displaying a figure of -47%. This acts as a breaker in a trend that saw a deteriorating sequence between April 2022 and February 2023.

Slight Decline in Buyer Demand 

Despite the drop in house prices, there seems to be a softer decline in buyer demand throughout the housing market, a slender decrease since the month prior.

“Looking at new buyer enquiries, a headline net balance of -29% of contributors reported a fall in demand during March (more or less unchanged from a reading of -30% last month).”

When broken down, these figures aren’t uncommon for the whole of the country, where almost every area has recorded a negative result in the most recent survey. This slight fall in buyer demand shows one of two things; house prices are falling because people are eager to sell their assets, or those looking to purchase are waiting for the market to fall further before investing.

First-Time Buyers Leaving Their Mark

In Britain, first-time buyers of property are making waves with a record-breaking figure so far for 2023. Hamptons are reporting that first-time buyers make up 27.1% of the buyers’ market at the time of writing. This trend features a gradual rise from 21.6% to the current figure since 2018.

However, there is a clear finding that first-time buyers adapt to the heightened climate in which we find the housing market.

First-Time Buyers Downsizing to Adapt

Despite more first-time buyers getting more involved with the property market like never before, there is a pattern emerging that smaller properties are being targeted to combat the cost-of-living crisis and the inflated prices of houses.

Hamptons state that:

“The average first-time buyer in Great Britain reduced their budget by nearly £12k compared to last year, a significant shift given the increase in average house price….

2023 also marked the first time in over a decade whereby most first-time buyers now purchase one and two-bed homes, rather than larger properties.”

With housing demand increasing and property prices around the country falling, the pattern of the market seems to be that first-time buyers will continue to make waves throughout the market.

For more insight into topics such as the housing market, read other articles on our blog. With customers needing the support of their brokers, now more than ever, it’s useful to expand your knowledge to be best prepared to offer your services. Alternatively, check out our LearningLab for free learning on a variety of crucial topics.

References:

March 2023, U.K.R.M.S. (2023) March 2023 UK Residential Market Survey, Rics.org. Available at: https://www.rics.org/news-insights/market-surveys/uk-residential-market-survey (Accessed: April 20, 2023).

Downsizing first-time buyers, H. (2023) Downsizing first-time buyers, Hamptons. Available at: https://www.hamptons.co.uk/research/articles/downsizing-first-time-buyers (Accessed: April 20, 2023).