First time buyers losing interest in city living

New research by online mortgage broker Trussle has found that city living is losing its appeal among first time buyers, with the vast majority now preferring less central ocations.

Despite the allure of wider career prospects and higher salaries in major cities, an overwhelming 71 per cent of first time buyers are now planning to buy in towns, suburbs and rural locations. In contrast, the survey of 2,000 first time buyers carried out by Trussle, found that just 29 per cent aspire to purchase their first home in a city. This level of interest in city living from first time buyers is remarkably low, as the UK has previously had a high rate of urbanisation and the country’s urban population sits far above the worldwide average.

Higher house prices in urban locations is likely to play a huge factor in this trend and 65 per cent of respondents felt it was already ‘impossible’ to get on the housing ladder. In addition, the research found that the average budget for a first home was GBP174,266 and means popular destinations for young buyers, like London, which has an average first time buyer property price of GBP463,536, are out of reach.
Research prior to the pandemic signalled that city living was still popular, with London boroughs dominating the list of most popular destinations for first time buyers. But, respondents to this new research felt that coronavirus was exacerbating problems of affordability and 35 per cent stated that the financial impact of the pandemic had left them priced out of the market.
2020 saw lenders withdraw a large proportion of high loan-to-value (LTV) mortgage products, which may also impact where first time buyers can afford to buy. Despite a number of well-known lenders relaunching new high LTV mortgage deals recently, data from Trussle shows that there were just 163 90 per cent LTV mortgage products available in December 2020 compared with 3,053 the year before. As a result, buyers now need to save larger deposits, often 15 per cent of the property price or higher, as many 90 per cent LTV mortgages have disappeared. As a result, 40 per cent of those who have moved back in with mum and dad think it will take up to 5 years longer to save for a deposit. A lack of high LTV products would have a disproportionate impact on affordability in city centres where property is more expensive and would require more upfront savings.
Miles Robinson, Head of Mortgages at online mortgage broker Trussle, says: "The pandemic has increased the financial pressure many first time buyers were already feeling, as well as creating a seismic shift in what people expect from their home. As a result, financial pressures and rising house prices, alongside a desire for more outdoor space, means demand in more affordable rural locations is currently outpacing that for urban destinations.
"But, lenders are starting to return to the market with higher LTV products, which could make more expensive homes in the city more accessible again. And, we may see renewed interest in city living once the vaccine has been rolled out and things begin to return to normality. As such, only time will tell if the current lust for country properties is a long term trend or more of a spontaneous response.”