The latest analysis from Yopa, the full-service estate agents, reveals that first-time buyers are paying over the odds for their homes to the tune of almost 8%.

Yopa has analysed the difference between average asking price* and average sold price* for first-time buyer homes in Great Britain to understand what level inexperienced buyers are going to in order to get their first foot on the ladder.

The latest figures from Rightmove (September 2024) show that the average asking price for a first-time buyer home in Britain stands at £227,570.

However, data from the UK House Price Index shows that the average sold price for first-time buyer homes is £245,208, which means first-timers are paying an average of 7.8% over the odds to get a foot on the ladder.

This is particularly striking when compared to the wider British market which shows buyers going in low with their offers.  As of September 2024, the average overall asking price in Britain is £370,759, while the average sold price is -21.3% less at £291,828.

The data suggests that first-time buyers are more willing to offer above the odds in order to secure that first foot on the property ladder, having often spent years saving the funds required to do so.

Luckily for first-time buyers, the average price of a first home has only increased by 0.9% in the past year. Meanwhile, the average price of a second-stepper home has shot up by 2.1% which means the second-stepper homes are now 51% more expensive than first-time buyer homes.

This difference in price goes some way to explaining why, outside of the first-time buyer market, sellers are struggling to achieve their asking price.

Due to the fact that buyers who are taking a step up the ladder are being faced with a price jump of 51%, they are much more inclined to negotiate heavily on price. And given the current market conditions, sellers don’t have a lot of clout with which to push back.

CEO of Yopa, Verona Frankish, commented:

“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.

 

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. 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.

 

Both of these factors can see first-time buyers end up shouldering mortgages that are more difficult to manage due to having stretched financially in order to secure them.

 

This is especially true now that we’ve got more and more lenders offering 95% LTV mortgages. This might make the market more accessible for first-timers, but it also gives them more money to pump into their bids when trying to secure a property and sees them paying higher interest than they may have otherwise.”