As high interest rates and affordability pressures continue to bite, a coup for the capital is being staged by perhaps the most unlikely group; first-time buyers. In August, more first-timers than movers registered to purchase a home for the first time since our records began in 2010.
Until then, the share of mover buyers registering their interest in the capital had been consistently higher than the share of first-time purchasers; however, last month, 45% of applicants were looking for their first home, compared with 44% who were movers.
High mortgage rates have left many would-be movers either reluctant to do so, or struggling to sell their current home. Upsizers, in particulary, have found it costly to move on. By contrast, would-be first-time buyers have continued looking to get on the ladder in order to escape the red-hot rental market.
Across London, there were 18 boroughs where first-timers outnumbered movers registering to buy a home last month, up from just 7 boroughs in the whole of 2022. These are generally more affordable boroughs, with Bexley, in south-east London topping the table – in August, 90% of the buyers registering to buy a home there were looking to make their first move. Also in the top five are Greenwich, Brent, Barking and Dagenham and Tower Hamlets.
With the average first-time buyer budget in London now £460,000 – down from a peak of £512,000 in July last year – it is more affordable areas and smaller homes that are holding up best and proving most resistant to price falls. Our analysis of the latest ONS data (up to June) shows that flat prices are rising faster than house prices in 26 of London’s 33 boroughs – that’s a significant rise from summer 2022 when house values were outpacing flat values in every single borough.
Going forward, the capital’s more affordable homes and neighbourhoods will remain most resistant to higher mortgage rates pushing down prices. However, when interest rates do eventually begin to fall, we expect that it will be London that kickstarts the new housing market cycle, seeing price growth return faster than anywhere else in the country.
