Barclays Property Insights: FTB’s increasingly opt for ‘forever homes’
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 % in August, following July’s six-month low of 26 %.
Barclays mortgage data shows that three-bedroom homes are the most popular choice for properties, making up 46 % 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 %) say they bought a property with more bedrooms than they currently need, to avoid upsizing later. This compares to just 13 % across all ages.
First-time buyers are increasingly turning to houses, with semi-detached properties making up over a third (33.5 %) of August’s first-time purchases, up 1.7 % year-on-year. Meanwhile flats declined in popularity by 2.7 %, accounting for a fifth (19.6 %) of first-time buyer homes.
A third (33 %) of recent Gen Z buyers, aged 18 to 27, said they bought a ‘forever home’ so that they wouldn’t have to move. Similarly, nearly three in 10 (27 %) 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 %) of Gen X, aged 44 to 59, and 40 % of Millennial homeowners said they prioritised having a garden or outdoor space. Comparatively, only a third (32 %) of Gen Z felt the same. Meanwhile, Gen Z were much more likely to want a dedicated work from home space (28 %) compared to 20 % of Millennials and just 9 % of Gen X.
Borrowers opt for longer mortgage terms to keep costs down
Barclays data shows an increase in popularity of 30+ year mortgage terms. Among first-time buyers, these account for 41.3 % 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 %) 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 %) believe their mortgage payments take up too much of their monthly income. On average, homeowners report their mortgage accounts for 27.7 % of their take-home pay, up from 26.6 % in July.
However, over half of those with a mortgage (53 %) 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 %.
Confidence rebounds, but cost concerns linger
Mortgage and rent spending grew 4.4 % year-on-year in August, down from 5.2 % in July, following the Bank of England’s base rate reduction. Though confidence in the housing market tipped back up slightly to 29 %, monthly outgoings remain front of mind, with 60 % concerned about rising mortgage and rental costs.
Encouragingly, a fifth (22 %) of renters believe homeownership is achievable within five years, up from 16 % last month and the highest level since February. However, amidst reports of record high house prices, nearly half (47 %) cite this as a major barrier to ownership, up from 38 % in July.
Meanwhile, three-fifths (61 %) of renters have seen or expect to see their housing costs increase this year, squeezing their ability to save. To manage expenses, 40 % are reviewing their budgets, 43 % are cutting back on small luxuries, and 27 % 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.“