A Third Of First-Time Buyer Purchases Are Semi-Detached Properties

• Barclays mortgage data shows semi-detached properties rose in popularity in August, accounting for 33.5 per cent of first-time buyer purchases
• Four in 10 Barclays first-time buyer customers chose mortgages allowing them to complete their repayments over a 30+ year term
• Confidence in the housing market recovered slightly to 29 per cent, up 3 percentage points month-on-month
• A fifth of renters believe homeownership is achievable within five years – the highest level since February
• Barclays Property Insights combines data from across the Bank with consumer research to provide in-depth analysis of UK housing trends.

New proprietary mortgage data from Barclays Property Insights reveals increasing popularity of semi-detached properties, as first-time buyers report a greater appetite for ‘forever homes’. Thinking about their costs in the near term however, buyers are opting for higher-duration mortgages to reduce their monthly payments. Meanwhile, confidence in the housing market rebounded slightly to 29 per cent in August, following July’s six-month low of 26 per cent.

Barclays mortgage data shows that three-bedroom homes are the most popular choice for properties, making up 46.4 per cent of all purchases in August. Millennial homeowners, age 28 to 43, are the most likely age-group to prioritise extra space – over a fifth (22 per cent) say they bought a property with more bedrooms than they currently need, to avoid upsizing later. This compares to just 13 per cent across all ages.

First-time buyers are increasingly turning to houses, with semi-detached properties making up over a third (33.5 per cent) of August’s first-time purchases, up 1.7 per cent year-on-year. Meanwhile flats declined in popularity by 2.7 per cent, accounting for a fifth (19.6 per cent) of first-time buyer homes.

A third (33 per cent) of recent Gen Z buyers2, aged 18 to 27, said they bought a ‘forever home’ so that they wouldn’t have to move. Similarly, nearly three in 10 (27 per cent) of all recent buyers said they intend to stay in their new home for at least 10 years.

When choosing a property, certain features are more highly sought after by those in different life stages. Nearly half (49 per cent) of Gen X, aged 44 to 59, and 40 per cent of Millennial homeowners said they prioritised having a garden or outdoor space. Comparatively, only a third (32 per cent) of Gen Z felt the same. Meanwhile, Gen Z were much more likely to want a dedicated work from home space (28 per cent) compared to 20 per cent of Millennials and just 9 per cent of Gen X.

Borrowers opt for longer mortgage terms to keep costs down

Barclays data shows an increase in popularity of 30+ year mortgage terms1. Among first-time buyers, these account for 41.3 per cent of purchases, as they are typically younger and so have longer to pay back a mortgage.

When asked about their preferences, nearly four in 10 (37 per cent) mortgage holders feel 30-40-year terms are more desirable than shorter durations because they could mean lower monthly repayments. This comes as four in 10 homeowners (41 per cent) believe their mortgage payments take up too much of their monthly income. On average, homeowners report their mortgage accounts for 27.7 per cent of their take-home pay, up from 26.6 per cent in July.

However, over half of those with a mortgage (53 per cent) are wary of extending their loan duration, as it would make them feel financially vulnerable later in life, with Millennials, feeling this most strongly at 60 per cent.

Confidence rebounds, but cost concerns linger

Mortgage and rent spending grew 4.4 per cent year-on-year in August, down from 5.2 per cent in July, following the Bank of England’s base rate reduction. Though confidence in the housing market tipped back up slightly to 29 per cent, monthly outgoings remain front of mind, with 60 per cent concerned about rising mortgage and rental costs.

Encouragingly, a fifth (22 per cent) of renters believe homeownership is achievable within five years, up from 16 per cent last month and the highest level since February. However, amidst reports of record high house prices, nearly half (47 per cent) cite this as a major barrier to ownership, up from 38 per cent in July.

Meanwhile, three-fifths (61 per cent) of renters have seen or expect to see their housing costs increase this year, squeezing their ability to save. To manage expenses, 40 per cent are reviewing their budgets, 43 per cent are cutting back on small luxuries, and 27 per cent are reducing holiday spending.

Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, said: “Our data shows that first-time buyers are not considering property merely to get a 'foot on the ladder' but for the long term. Whether it’s to create space for a growing family, or to invest for the future, it’s encouraging to see young people feel slightly more confident in taking this significant step.  

“It’s clear that buyers are still cost-conscious as 30+ year mortgage terms become more popular - this option helps consumers reduce their payments by stretching their borrowing over a longer period of time."

Julien Lafargue, Chief Market Strategist at Barclays Private Bank and Wealth Management, said: “Despite facing challenges, the UK economy continues to demonstrate resilience. Our data shows that a period of caution is emerging, with over half of businesses delaying investment decisions until after the Autumn Budget, and consumers are also taking a ‘wait and see’ approach as they anticipate any changes that may lie ahead.

“However, looking beyond the immediate horizon, the combination of economic factors such as moderating inflation, and a more accommodative stance from the Bank of England should provide a supportive backdrop for the housing market. These considerations may help sustain demand and improve affordability, even as broader economic uncertainty lingers.“

To understand more about mortgage repayments, or how much you could borrow, try our mortgage calculators here. 

1 Mortgage term refers to the length of time during which a customer will make contractual monthly payments and needs to have repaid their mortgage in full by the end of the term (e.g., 25 years). This is different to a mortgage product with a fixed interest rate period, where the interest rate stays the same for a set length of time (e.g. 2 year fixed rate).

2 Recent buyers/sellers defined as within the last three years.

Source : Barclays

Image : William Barton / shutterstock / 1787318480

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