First-time buyer demand edges higher in Q4
The latest research by Yopa has revealed that first-time buyers are beginning to return to the market, encouraged by stabilising interest rates and the base rate cut seen in December, with demand edging higher during the final quarter of the year.
Yopa analysed first-time buyer (FTB) demand based on the proportion of homes listed under buying schemes* that have already sold subject to contract as a percentage of total available stock and how this compares to the previous quarter.
The research shows that across Britain as a whole, 32.8% of first-time buyer suitable homes had found a buyer in Q4, up from 32.3% in Q3, representing a quarterly increase of 0.5 percentage points. However, while demand has improved, the supply of first-time buyer specific homes remains extremely limited, accounting for just 1.9% of all properties currently listed for sale across the market.
Looking at where demand is currently strongest, Newcastle topped the table in Q4, where 57.6% of first-time buyer homes have already found a buyer. Bristol follows closely with demand at 52.4%, while Liverpool ranks third at 47.4%, highlighting that competition remains intense in these markets for first-time buyers.
When it comes to quarterly momentum, Plymouth has seen the largest increase in first-time buyer demand between Q3 and Q4, rising by 14.1 percentage points to 34.6%. Newcastle has also recorded a substantial quarterly uplift of 13.4 percentage points, while Cardiff has seen demand increase by 12.2 percentage points, suggesting renewed buyer confidence in these markets as borrowing conditions have steadied.
Despite these improvements in demand, choice remains constrained for first-time buyers. Plymouth continues to offer the greatest availability of first-time buyer suitable homes, however, these properties accounted for just 2.3% of total stock in Q4.
Portsmouth and London both follow at 1.6%, underlining that even in the strongest markets, supply remains limited.
Verona Frankish, Chief Executive Officer at Yopa, commented:
“After a challenging year for first-time buyers, it’s encouraging to see demand begin to edge higher as interest rates stabilise and confidence slowly returns, particularly following the base rate cut seen in December.
However, while demand has improved, the underlying challenge for first-time buyers remains unchanged. The supply of homes available with the support of a buying scheme is still extremely limited and this imbalance continues to cap the pace of recovery.
Until we see a meaningful increase in the availability of genuinely affordable first-time buyer homes, improvements in demand are likely to remain modest, even with a more settled outlook for the year ahead.”
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