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Rise of the first-time buyer: half of the house purchases in London so far this year are by new homeowners

Wandsworth, where 72 per cent of the homes sold so far this year went to first-time buyers (Daniel Lynch)
Wandsworth, where 72 per cent of the homes sold so far this year went to first-time buyers (Daniel Lynch)

First-time buyers account for half of the homes sold in London in Q1 of 2024, reports Hamptons.

Wandsworth was the second most popular place in the UK for first-time buyers, who accounted for 72 per cent of the homes sold in the borough so far this year.

In Brent, Greenwich and Newham, 68 per cent of the homes sold in the first months of 2024 have been to first-time buyers.

In Havering 65 per cent of homes sold to new home owners, and in Barking and Dagenham it was 61 per cent.

A combination of record-breaking rent rises in 2023 and mortgage rates coming down in the first months of this year has encouraged more first-time buyers to enter the market, said Hamptons.

In 2023, 41 per cent of London home purchases were made by first-time buyers.

A decade ago, only 28 per cent of the market was new homeowners.

First-time buyers are currently spending £422,660 on average on a house in London — £19,000 more than the average first home in the capital in 2023.

But it is £108,710 less that the average first home in the capital in 2020.

First-time buyers are having to spend less to borrow less following the Bank of England progressively hiking the base rate to 5.25 per cent in the aftermath of Liz Truss’s disastrous 2022.

While mortgage rates have dropped to around four per cent, it is still much more expensive to take out a first mortgage than it was five years ago.

But London’s record-breaking rent increases have made the alternative much less appealing.

Rents rose 6.9 per cent on average across the capital in 2023, according to the Office for National Statistics, the highest annual increase since records began.

A report from Hamptons found Londoners spent £32.1 billion on rent last year — the same as the value of all the homes sold in the capital in the same period.

“In a bid to escape the heated rental market, first-time buyers have dominated the sales market this year,” said  Aneisha Beveridge, head of research at Hamptons.

“This unprecedented move comes despite a limited package of government support measures,” added Beveridge.

“Instead, with high mortgage rates curtailing their ability to borrow, most are compromising on a smaller home to get a foot onto the housing ladder.”

Across the UK, a third of the homes sold in Q1 of 2024 have been bought by first-time buyers, up from 29 per cent in 2023.

These first-time buyers are purchasing smaller homes in their bid to escape the rental market.

In 2024, 51 per cent of the homes bought by new homeowners had just one or two bedrooms, and 28 per cent of the first homes were flats.

Hamptons projects that there could be 363,000 new homeowners in the UK in 2024.

But these homes are still less affordable than they have been in previous years.

A typical first-time buyer with a 90 per cent loan-to-value mortgage paid over 30 years will pay £13,977 on year one mortgage repayments in 2024. That’s £1,524 more than they would have paid in 2021, and for a larger home.