First-Time Buyers are seeing the UK property market get off to a slow start to the year in 2023.
New research from property portal Zoopla found that prospective home-buyers are delaying their decision due to high mortgage costs.
The research also suggests that some first-time buyers opt for more affordable flats.
Mortgage rates are expected to stay in the 4-5% range this year, and future home-buyers are holding tight, waiting for more affordable borrowing costs.
There has been a shift in property preferences towards flats, with 27% of first-time buyers now looking for one and two-bedroom flats, up five percentage points from a year earlier.
Demand for three-bedroom homes fell five percentage points to 39%, but they remain the most in-demand property type in the UK.
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Zoopla said: “This is a trend we are seeing across all areas of the UK in the first few weeks of the year as early buyers seek better value for money. In London, 1- and 2-bed flats account for 49% of demand, up from 42% a year ago.”
Richard Donnell, executive director at Zoopla, said:
“The first few weeks of the year have got off to a stronger start than might have been expected given how market activity stalled at the end of 2022. There has been a clear shift towards flats as the early buyers focus on value for money and adjust expectations given the hit to buying power from higher mortgage rates.
“A proportion of existing homeowners are holding back waiting to see if sizeable price falls materialise and how far mortgage rates fall back before entering the market. We believe demand for homes has room to improve further in the coming weeks. Anyone serious about selling needs to be realistic on the asking price and needs to ensure this is in line with what buyers are prepared to pay.“
