New Home Buyers: The First-Time Buyer
The last of our four major buyer types is the first-time buyer. But last is by no means least in this case, as first-time buyers are a big part of the market for new build properties. In 2019 there were 353,436 first time buyers (for both new build and existing residential properties) - the highest annual total since 2007.
And this position has a lot to do with the juicy carrot being dangled in front of first time buyers in the shape of the government’s Help to Buy scheme. The fact that this is only available on new build homes makes this section of the property market extremely attractive to first timers. And for many, it’s the only feasible option - as they simply don’t have the financial ability to buy a property outright under their own steam. Incentives may soon increase, as the government is due to report back on its consultation on the First Homes policy, designed to offer discounted homes.
To add to that, there are many more properties available through shared ownership – and numbers are rising. According to a recent Savills report, there were 13,400 shared ownership completions in 2018, and Rightmove listed around 2,500 secondhand shared ownership properties in Q4 2018 - 69% more than in Q4 2010.
So, money is a massive factor for first-time buyers, as they usually don’t have much of it. Also, many first-time buyers don’t yet have families – which means that this segment is often looking for smaller houses and flats.
Financial issues also influence the locations that attract the most first-timers. London and high priced surrounding areas – like Tunbridge Wells and Sevenoaks – are unattractive to most first-time buyers. Even with Help to Buy, many are priced out of the market in these expensive locations.
So, you must look further afield to find the first-time buyer hot spots. These include Bristol, Southampton and Glasgow.
And the fact that money is tight means that offering incentives can work very well with first-time buyers. Financial extras such as stamp duty being paid, or carpets being bought and laid free of charge, can make a decisive difference when it comes to the decision to buy. As the least experienced category of new build buyer, developers should provide regular updates on the development, useful content and regular engagement to build confidence with these buyers.
The warranty is also very attractive to first-time buyers. When your income is stretched simply to afford the mortgage repayments, it’s very inviting to think that many problems can be cleared up without having to dip into your own pocket to fund them.
This also applies to the minimum maintenance you get with a new build. And the fact that many new buyers have little or no experience of looking after a property makes this doubly attractive. Some developers and warranty providers create useful maintenance and troubleshooting guides and videos that will appeal to this category of buyer too.
There are a number of websites and apps that support this group in their saving/buying journey. But immediately after moving in, the buyer is left to juggle a myriad of independent tools and services for different aspects of managing their property. These could include sites for utility switching, banking and insurance, getting help with tasks e.g. cleaning and gardening. Once the initial snag and warranty period ends, homebuyers are on their own to find trades to help with repairs and replacements. Even further down the line, homeowners may need renovators or builders for extensions and loft conversions. The fragmented property ecosystem is a challenge for these buyers that most will only realise once they've moved in. In the Build To Rent sector, landlords provide useful tenant engagement apps to simplify running a home. This is definitely an area that developers could look at to improve the home ownership experience for their buyers.
Sources
https://www.savills.co.uk/research_articles/229130/220215-0