The pandemic has forced first-time buyers to turn away from city living due to a shortage of high loan-to-value mortgages.
The interest in younger first-time buyers, who have traditionally looked to balance home ownership alongside busy careers and metropolitan living, is “remarkably low”, according to a survey from online mortgage broker Trussle.
It found that 71 per cent of first-time buyers instead plan to buy a home in towns, suburbs and rural locations.
“This level of interest in city living from first-time buyers is remarkably low, as the UK has previously had a high rate of urbanisation and the country’s urban population sits far above the worldwide average,” the report said.
Higher house prices in cities coupled with financial uncertainty among household budgets caused by Covid-19, have caused these buyers to look elsewhere.
The report said 35 per cent of first-time homebuyers found “the financial impact of the pandemic had left them priced out of the market”. Even before the pandemic, 65 per cent of these buyers felt it was already ‘impossible’ to get on the housing ladder, said Trussle.
However, prior to the pandemic city living remained popular, with five London boroughs dominating the top-ten list of most popular places to live in the UK among first-time buyers, according to another survey by property website Zoopla last February. Newham, Greenwich and Southwark were popular destinations, as was Luton, close to the capital.
However, the Trussle report found that the average budget for a first home is £174,266, which means that many parts of London, which has an average first-time buyer property price of £463,536, are out of reach.
The aspiration for city living has also been hit by the withdrawal of higher LTV mortgages last year.
Despite several well-known lenders relaunching new high LTV mortgage deals recently, data from Trussle shows that there were just 163 LTV mortgage products valued at 90 per cent of the property available last month, compared with 3,053 the year before.
Buyers now need to save larger deposits as a result, often 15 per cent of the property price or higher, said Trussle. The broker added that 40 per cent of young buyers who have moved back in with their parents think it will take up to five years longer to save for a deposit.
Trussle head of mortgages Miles Robinson said: “The pandemic has increased the financial pressure many first time buyers were already feeling, as well as creating a seismic shift in what people expect from their home. As a result, financial pressures and rising house prices, alongside a desire for more outdoor space, means demand in more affordable rural locations is currently outpacing that for urban destinations.”
Robinson added: “But, lenders are starting to return to the market with higher LTV products, which could make more expensive homes in the city more accessible again. And, we may see renewed interest in city living once the vaccine has been rolled out and things begin to return to normality. As such, only time will tell if the current lust for country properties is a longterm trend or more of a spontaneous response.”
Trussle carried out its online survey with 2,005 UK adults weighted to be nationally representative using research agency Sapio in October 2020.
