Recent data reveals that first-time home buyers in the UK are paying an average of 7.8% above the asking price to secure their properties. This trend highlights the challenges faced by newcomers in a competitive housing market.
According to Rightmove’s September 2024 figures, the average asking price for a first-time buyer home in Britain was £227,570.
However, data from the UK House Price Index indicates that the average sold price for these properties was £245,208, reflecting a 7.8% premium paid by first-time buyers.
Are first-time buyers desperate to own a house that they’re over paying?
The broader market shows buyers negotiating lower prices. The average asking price across all property types stood at £370,759, while the average sold price was £291,828—a reduction of 21.3%.
Verona Frankish, CEO of Yopa, told The London Property News, “It’s great to see first-time buyers keen to get on the ladder to such an extent that they’re paying above and beyond the asking price. However, with this eagerness comes an element of risk.”
Frankish adds that the determination of first-time buyers, combined with a limited supply of suitable starter homes, contributes to this trend.
“First-time buyers are, understandably, in the dark when it comes to buying property, and because they’re so determined to make a purchase, they can easily end up offering higher prices,” she explains.
‘High demand and limited supply’
The disparity between asking and sold prices for first-time buyer homes suggests a high demand and limited supply in this segment. This contrasts with the wider market, where buyers have more leverage to negotiate prices down.
Additionally, the average price of a first home has increased by just 0.9% in the past year, while second-stepper homes have risen by 2.1%, making them 51% more expensive than first-time buyer homes.
This significant price gap may explain why sellers outside the first-time buyer market are struggling to achieve their asking prices.
Experts advise first-time buyers to conduct thorough research and seek professional guidance to avoid overpaying. Understanding market conditions, comparable property prices, and effective negotiation strategies can help buyers make informed decisions.
Frankish suggests that first-time buyers should be cautious and well-informed.
“This can also happen due to the fact that there simply aren’t enough suitable first homes on the market and so demand is high.”