Lockdown savers: Sharp increase in first time buyers funding own deposits

As millions of home buyers look forward to purchasing their first property thanks to the government’s newly launched mortgage guarantee scheme and the stamp duty holiday, new research from Purplebricks, the UK’s leading tech-led estate agent, reveals changes in first time buyer behaviours and preferences. The past five years has seen a sharp spike in first time buyers who have saved up the deposit and got on the property ladder under their own steam. Only 29% of first time buyers had saved their own deposit in 2016 compared to 43% today.

With costs associated with commuting, holidaying and socialising drastically reduced in the pandemic according to Bank of England statistics**, many consumers have found themselves with more money in their pockets. For those trying to buy property for the first time, these savings are clearly being put to good use.

For first time buyers today, a fixed rate mortgage is the mortgage of choice, with 43% opting for this.

Although property prices have sharply increased in the past five years, first time buyers are actually planning to put down smaller deposits than their counterparts five years ago – with down payments dropping from £32,954 in 2016 to £27,521 today. This may partly be due to the recent announcement of the government’s mortgage guarantee scheme (which enables first time buyers to get on the property ladder with just a 5% deposit) meaning first time buyers feel able to start their property search with a smaller deposit.

Bank of mum and dad still vital

Despite the rise in self-sufficient first time buyers, parents are still providing financial assistance with deposits for almost one third of property purchases today, almost the same as five years ago.

Pandemic may have changed priorities

The research has also highlighted significant changes in first time buyer priorities, with 68% saying they would consider living in a rural area – now that working from home is an option – compared with 57% five years ago.

As more of us work from home, good Wi-Fi is now more highly valued than before. A property with strong Wi-Fi is now important to 41% of first time buyers compared to 33% in 2016 – making it a bigger priority than proximity to good schools, pubs and cafes. Good transport links are still considered important with almost half (48%) of today’s first time buyers considering this a top priority, an increase from 41% in 2016.

New build homes now more popular

New build homes are now favoured by one third of first time buyers today, an increase from 2016 when they were sought by a quarter of first time house hunters. First time buyers today are also more inclined to look for a home that is easy to maintain (41%) than those in 2016 (34%).

Susan Gregory, Purplebricks Divisional Sales Director said, “With lockdown limiting consumer spending, those saving to buy their first property have been able to put more aside and we are seeing many first time buyers funding their deposits independently. It is really encouraging to observe this growing trend for first time buyers to finance their first property purchases under their own steam.

“There has been a big shift in buyer behaviour over the past 12 months. The trend towards agile working has enabled many potential buyers the freedom to look further afield, and consider properties in more rural areas as they are not as constrained by their commute. Areas that were not on the radar of first time buyers before are now looking more attractive, leading to much more mobility within the UK housing market as a whole.”