Hope for First-Time Buyers in 2024

The year 2023 proved to be a challenging time for first-time buyers in England. With rising mortgage interest rates, high inflation, soaring house prices, and an ongoing cost-of-living crisis, many prospective buyers found the dream of homeownership slipping further out of reach. However, as we move into 2024, there are signs of hope for first-time buyers on the horizon that could make buying a home more achievable.

The Hard Truths Of 2023

According to data released by Uswitch, 874,000 first-time buyers entered the housing market in 2023, marking an increase of 22,000 from the previous year. Despite this uptick, the average age of a first-time buyer was 34, and a significant portion of these buyers were aged over 35, with 20% aged 35-44 and 13% over 45 years old. This indicates that many people are waiting longer to purchase their first home.

First-Time Buyer Mortgage Affordability In 2023

Affordability was a major barrier for many. A survey revealed that 40% of non-homeowners in the UK do not plan on buying a property within the next five years, with 53% citing affordability as the primary reason. Furthermore, 49% of respondents indicated that they would need house prices to fall by 11-20% before considering a purchase.

First-Time Buyer Deposits

In 2023, the average deposit for first-time buyers in England was £53,414, with the majority (87.1%) coming from personal savings. Over a third (36%) of these buyers received financial assistance from family or friends, highlighting the dependence on external financial support to step onto the property ladder. Many fist time buyers hope to use future inheritance towards house purchases, however according to the same research, only 8.5% of first-time buyer deposits came from inheritance.

Signs Of A Brighter Future For Buyers In 2024 And Beyond?

While the statistics from 2023 paint a challenging and frankly quite bleak outlook for people looking to buy their first homes, there are emerging trends in 2024 that suggest a more favourable environment for first-time buyers in the near future. Let’s take a look at what might be helping buyers moving forward.

Declining Inflation

One of the most significant developments is the reduction in inflation, which dropped to 2.3% in April 2024. This decline is expected to ease financial pressures on the general public, potentially stabilising household budgets and increasing disposable income. Lower inflation often leads to reduced costs of living, which can make saving for a home more feasible.

Falling Mortgage Rates

As inflation decreases, we are also beginning to see a reduction in mortgage interest rates. Some lenders have already started to lower their rates, and this trend is expected to continue in the coming months. Lower interest rates mean more affordable monthly mortgage payments, making homeownership more accessible for first-time buyers.

Stabilising Or Decreasing House Prices

Another positive trend is the stabilisation or even the decline in house prices. Unlike previous years where prices continuously surged, 2024 has seen either stagnant prices or slight drops in value. This shift could mean that properties become slightly more affordable, aligning better with the budgets of first-time buyers.

Increased Availability Of Properties

Additionally, the market is witnessing a rise in the number of former rental properties available for purchase. Many buy-to-let landlords are selling their properties due to the increasing costs of rental property ownership. This influx of properties into the market increases the supply, offering more options for residential buyers and potentially lowering competition and prices. Not great news for landlords, but good news for people looking to buy a home.

New Lender And Government Schemes For First-Time Buyers

2023 saw the end of the Help to Buy scheme, after 10 years. A scheme developed by the government designed to help first-time buyers to get on the property ladder. In the future we do expect to see more government run and privately run schemes for first-time buyers being released on the open market. Currently schemes like shared ownership, own new, deposit unlock and others are available for first-time buyers.

Planning Your Purchase

If you’re a first-time buyer looking to purchase a home in 2024 or the coming years, it’s crucial to start planning as early as possible. Despite the promising trends, navigating the housing market can still be complex. Speaking to a qualified professional mortgage advisor, like our team at Oportfolio Mortgages, can provide invaluable guidance. We can help you assess your financial situation, explore your mortgage options, and get you into the best position to buy your first home. Call or email our team today to get the ball rolling.