It’s widely known that first time buyers have been an important audience for estate agents for some time; but as the industry has faced increased economic and political headwinds, this group have become vital.
Within some new homes developments they can exceed 50% of all sales particularly in London and the South, helped by recent changes to Stamp Duty that abolished the tax for most first-time buyers, and the generous Help to Buy scheme.
A recent Zoopla research report shows that first time buyers have been the driving force behind house sales more generally as well, increasing in numbers by 85% since 2010 compared to an 8% rise among those moving up the property ladder.
Also, first time buyers made up a substantial 36% of all housing sales and 14% of all new homes sales last year.
Wait and see
Scott Black, MD of Crest Nicholson Regeneration suggests the slowdown in sales that many estate agents are experiencing is partially due to “the discretionary buyers who’ve decided to ‘wait and see’ until after Brexit, but first time buyers are driven by the need to get on the property ladder and don’t have a related sale to worry about.”
Demand from first time buyers show no signs of flagging outside the capital in markets where, sometimes, demand from second and third steppers and downsizers has eased off.
It is therefore important that estate agents selling homes in the core first time buyer market make an effort to understand their wants and needs, even if only to remain competitive.
A pen portrait
The concept of a ‘young’ first time buyer has become somewhat of a rarity.
Research among portal users reveals that only 5% of first time buyers are under 24 years old and that, although the biggest group (40%) are between 25 and 34 years old, nearly a third are between 35 and 44 years old.
Surprisingly, 14% are between 45 and 54 years old, although many of these are likely to be recently-divorced people getting on to the property ladder for the first time either via the Help to Buy scheme or as cash purchasers.
Size is becoming everything
This older profile means the ‘starter flat’ synonymous with first time buyers is now less important; research shows that between 40% and 60% of first time buyers (depending on region) are looking for a three-bedroom house to buy and that a further 10% want four-bedrooms.
Help to Buy has been one of the most significant factors in helping many people onto the property ladder, the scheme is often the only source of help that first time buyers can turn to.
As it stands, it is due to finish in 2021 but likely to be extended to 2023 should the manifestos of the leading parties ring true.
Mortgages have been getting more difficult to acquire since the government introduced its ‘stress testing’ for mortgage borrowers’ finances in 2014 and, although the financial services industry has reacted with higher and higher loan-to-value rates, Help to Buy is much more attractive assuming buyers are happy to live in a new-build.
Fellow agents are taking the bespoke approach
Marketing as a discipline demands that we understand what our audience looks like, their desires and what their triggers are. If your business is to cater your efforts to one audience, start with first time buyers.
Some agents have gone so far as to alter their business to better suit this market. One example is Complete Estate Agents based in Exeter, they recently began to specialise in helping Help to Buy registered developers find pre-qualified first time buyers.
This helps ensure prospective purchasers introduced to developers are more likely to be approved for a Help to Buy mortgage application.
“We offer a total service from initial consultancy through to completion because that’s how we can be most effective in the new homes market,” says its MD Jade Boyles-White.
Download the first time buyer report to get to know the make-up of first time buyers in your area.