The latest research by Yopa has revealed the property markets where first-time buyers are purchasing at the biggest discount compared to existing homeowners. The gap between the average first-time buyer and former owner-occupier purchase price has stretched to as much as 47.3%.
Yopa analysed the latest UK House Price Index data. They compared the average price paid by first-time buyers with that paid by former owner-occupiers across Great Britain, before revealing the local authorities where the first-time buyer purchase price sits furthest below that of existing homeowners.
First-time buyer price points
Across Great Britain as a whole, the average first-time buyer is currently purchasing at £229,107. This is £106,245 less than the £335,352 average paid by former owner-occupiers. This means that the average first-time buyer purchase price sits 31.7% below that of an existing homeowner.
At a regional level, the South East is home to the largest first-time buyer house price discount. The average first-time buyer purchase comes in at £300,540. This creates a 36.7% difference from the £475,135 paid by former owner-occupiers.
Scotland ranks second, with the average first-time buyer price sitting 34.8% below that paid by former owner-occupiers, followed by London at 32.3%.
However, the capital boasts the largest difference in pounds and pence. In London, first-time buyers pay an average of £471,629. This is £224,981 less than the £696,610 average paid by former owner-occupiers.
The East of England also sees first-time buyers purchase at an average of 32% less, followed by the South West (31.1%), West Midlands (30.1%), Wales (28.1%), North West (27.8%), East Midlands (27.6%), Yorkshire and the Humber (27.3%) and North East (26.7%).
Largest differences in the UK
At local authority level, Elmbridge is home to the largest first-time buyer house price discount.
The average first-time buyer in Elmbridge is purchasing at £500,171, compared with an average of £948,215 amongst former owner-occupiers. That’s a difference of £448,044, with the average first-time buyer purchase price sitting 47.3% lower.
Brentwood ranks second with the average first-time buyer price is £369,662. This is 45.5% below the £677,883 paid by former owner-occupiers causing a difference of £308,221.
Tandridge completes the top three. First-time buyers are purchasing at an average of £330,149 versus £602,277 for former owner-occupiers, a difference of £272,128, or 45.2%.
Mole Valley also ranks amongst the markets with the largest first-time buyer house price discount, with the average first-time buyer purchase price sitting 44.7% below that paid by former owner-occupiers.
Surrey Heath ranks fifth with a 42.7% difference, followed by Three Rivers (42.6%), Woking (42.4%), Guildford (42.4%), East Hampshire (42.3%) and Waverley (42.1%).
Stepping onto the ladder
Verona Frankish, CEO of Yopa, commented on the differences for modern first-time buyers, stating that getting onto the property ladder still remains to be one of the biggest financial challenges many people face. With higher mortgage rates over recent years, this makes the task particularly more difficult.
She said, “Headline house prices don’t necessarily tell the full story for those looking to buy their first home. First-time buyers generally enter the market at a very different price point to those who are already on the ladder.
“Our research shows that this difference is substantial, with the average first-time buyer across Great Britain purchasing for more than £100,000 less than a former owner-occupier and, in some areas, the gap is considerably wider.”
Veronica goes onto explain that just because there is a larger first-time buyer discount, it does not make that area more affordable. Elmbridge, for example, still has first-time buyers paying more than £500,000 despite the substantially lower price point than existing homeowners.
“What it does demonstrate is that first-time buyers are generally entering at a different point of their local property market,” she continues. “They have to target homes that suit both their needs and their budgets. Meanwhile, those already on the ladder are often purchasing further up it.
“For aspiring homeowners, this is an important distinction. The headline cost of property within a particular area can often look daunting, but understanding what first-time buyers are actually paying provides a far more realistic benchmark when considering that first step onto the ladder.”