While the coronavirus pandemic has undoubtedly hit younger households more than other workers, perhaps surprisingly it’s also led to an increase in the number of million pound first-time buyers.
Our latest research shows that one in fifty first-time buyers spent £1m or more on their first home in 2020 - double the share recorded in 2019. The Covid induced race for space combined with low mortgage rates and a stamp duty holiday have accelerated the trend. As working from home becomes more important, some inner-city renters who have already saved up money for a deposit have decided to make the leap further afield to buy their first home.
First-time buyers purchasing in London are most likely to spend seven figures on their home. Last year, 8% of buyers spent £1m or more on their first home, up from 5% in 2019. In the South, the number was one in 25 – also double the share in 2019 and four times that in 2018.
This is one of the reasons why the average price of a home bought by a first-time buyer in 2020 has risen to £253,700 – passing the £250k threshold for the first time. In the South, the average first-time buyer spent £360,640 on their new home, more than double that of someone buying in the North.
In many cases, first-time buyers are waiting a little longer before buying. Londoners, in particular, are leap-frogging the traditional housing market ladder and buying a bigger family home in the suburbs or further outside the M25, rather than a smaller flat in the inner zones.
Six of the top 10 local authorities with the highest share of first-time buyers spending more than a million pound were outside of London. While Westminster tops the list, Hammersmith & Fulham and Sevenoaks come in joint second where half of first-time buyers spent seven figures on their first home last year.