What makes a first time buyer buy?
I was a first time buyer once. I bought my first little flat in north west London for £69,000 – no, I haven’t missed off a digit – and in the heady days of 1987, I got a 100% mortgage quite easily. All I did was phone a mortgage broker, send him one of my pay slips and Abbey National stumped up the money.
The idea of buying my own place was exciting but at the same time it also felt like the beginning of being a responsible grown-up, something I wasn’t entirely ready to face. And paying a mortgage when interest rates were in double figures wasn’t necessarily cheaper than renting. Nevertheless, I thought it was part of the process of getting on in life. It was something you had to do.
We hear a lot about the ‘first time buyer’ today. I’m not sure it even existed as a demographic when I bought my flat. The property press treats them as a bellwether as to how the market is doing. Are they getting older, younger? Where are they buying and why? How many mortgage offers are going to FTBs? How much do they have to save for a deposit and where do they get it from? Or are they to be pitied, condemned to renting or living with mum and dad forever?
The first time buyer is a frequent presence on a client brief under ‘target audience’, but, economics aside, are their motivations and reasons for choosing a home different from those of any buyer?
According to the Halifax, the average FTB is 31 (33 in London) and puts down a 15% deposit. MoneySupermarket says he or she pays, on average, £217,199 and get a mortgage for £173,766. In spite of Brexit, first time buyers are on the increase, with more than 25,000 of them taking out a mortgage in January 2019 alone.
I thought it would be interesting to talk to a real first time buyer and find out more about her journey towards buying her first home.
Ashleigh Wilks joined KEY Property Marketing eight months ago as a Client Relationship Manager. Ash, her partner Jonny and Boston terrier Norman (pivotal in the process as we shall see….) are about to move to a brand new house they’ve bought in Folkestone. At 26, Ashleigh is quite young for a FTB, though Jonny meets the typical demographic at 32. For her, buying definitely feels like part of the process of growing up.
Their decision was based on a mixture of hard economics and a wish to realise their dream of a lifestyle that just couldn’t be achieved in London, where they’ve been renting together for four years. Having Norman made them hanker for a garden, but renting a nice house with outside space in London was just unaffordable: around £3,000 a month for the area they were already living in. Buying in London was totally off their radar.
Ashleigh says: “It was time to make that next move. I wanted to put up shelves, and furnish the flat myself, and I couldn’t do that where we were renting. One day you just wake up and find you’ve had enough.”
They chose a new build house which, she admits, might seem strange if you want to put your own stamp on a home. But a big advantage is that there’s no chain and “Jonny likes ideas, but not DIY!”
Is Help to Buy really helpful?
Buying new also enabled them to use Help to Buy and pay a much smaller deposit. Ash reckons that without Help to Buy, they would be facing at least another year of hard saving to get a standard 10% deposit together. Paying off the equity loan doesn’t faze them; they’re planning to save from their salaries and pay it off in one lump sum. Applying for Help to Buy wasn’t entirely a straightforward process, however. They were frustrated with the anonymity of dealing with a Government department, and the necessity of getting every detail of the form-filling correct at every stage, or it would mean returning to Go. She thinks the estate agent might have explained things more clearly.
With all that’s going on at the moment, should first time buyers be taking the plunge? Ash says: “I think it’s a good time for first time buyers. People who already have a house have to worry about their equity, but we don’t. With Brexit there’s no certainty about anything, so we might as well do it now. Interest rates are at an all time low and no one seems to think they’ll go up.”
Several of Ash’s close family live in Folkestone so she knows all about the life that can be enjoyed there. For her, it’s the long-held dream of living by the sea, and having open space nearby for Norman’s walks. Working in central London, her commute had to be reasonable, but more crucial than time spent on the train was being near the station; five minutes’ walk in this case.
Maybe we should be careful when thinking about typical buyers. Everyone has their own story to tell, their own reasons to choose what they choose. Ashleigh and Jonny, for example, could at first sight be classed as trendy young Londoners whose life revolves around cocktail bars and trips to Selfridges. But they actually wanted to get out of the city and walk on the beach at weekends. And, far from being nervous about the financial and political climate as you might expect first timers to be, they’ve taken a far more gung-approach.
Who do you need to reach? Our experience gives us deep insight into first timers, second steppers, downsizers and buyers of every demographic. Talk to the team first when looking at your own property marketing.