First-time buyers are showing a clear preference for bigger homes and longer mortgages, according to the latest Barclays Property Insights data.
Semi-detached houses made up 33.5% of first-time buyer purchases in August, a rise of 1.7 percentage points on last year.
Flats slipped further out of favour, accounting for just 19.6% of purchases – down 2.7 percentage points year-on-year. Three-bedroom homes are now the most sought-after, representing almost half (46%) of transactions in August.
Millennials are driving this shift towards extra space, with 22% admitting they bought more bedrooms than they currently need to avoid the cost of upsizing later. Among Gen Z buyers, a third said they had already gone for a “forever home” they intend to stay in long term.
RACE FOR SPACE
But the desire for more space comes with affordability trade-offs. Four in 10 first-time buyers are stretching their mortgage terms to 30 years or more, as they try to keep monthly repayments manageable.
Barclays found that 37% of all mortgage holders now see longer terms as preferable for this reason.
Yet the concern is evident: over half of borrowers worry about the long-term impact of extended loans, with Millennials particularly wary.
AFFORDABILITY PRESSUERS
Affordability pressures are sharpening. The average homeowner reported that 27.7% of take-home pay went on mortgage repayments in August, up from 26.6% in July. Four in 10 homeowners said their mortgage payments take up too much of their monthly income.
Confidence in the housing market ticked up slightly to 29% in August, after July’s six-month low of 26%. But higher costs are still dominating sentiment. Mortgage and rent spending was up 4.4% year-on-year in August, albeit a slowdown from 5.2% in July following the Bank of England’s base rate cut.
TENANT SQUEEZE
Renters, meanwhile, remain squeezed: 61% say they have seen or expect increases in housing costs this year, with almost half naming high house prices as the biggest barrier to ownership. Still, there are signs of cautious optimism – 22% of renters believe they could buy within five years, the highest figure since February.
For brokers and lenders, the message is clear: younger buyers are aiming bigger, earlier, but affordability challenges mean flexibility in mortgage structures will remain in high demand.
COST-CONSCIOUS
Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, says: “Our data shows that first-time buyers are not considering property merely to get a ‘foot on the ladder’ but for the long term.
“Whether it’s to create space for a growing family, or to invest for the future, it’s encouraging to see young people feel slightly more confident in taking this significant step.
“It’s clear that buyers are still cost-conscious as 30+ year mortgage terms become more popular – this option helps consumers reduce their payments by stretching their borrowing over a longer period of time.”
AUTUMN BUDGET CONCERNS
And Julien Lafargue, Chief Market Strategist at Barclays Private Bank and Wealth Management, adds: “Despite facing challenges, the UK economy continues to demonstrate resilience.
“Our data shows that a period of caution is emerging, with over half of businesses delaying investment decisions until after the Autumn Budget, and consumers are also taking a ‘wait and see’ approach as they anticipate any changes that may lie ahead.
“However, looking beyond the immediate horizon, the combination of economic factors such as moderating inflation, and a more accommodative stance from the Bank of England should provide a supportive backdrop for the housing market. These considerations may help sustain demand and improve affordability, even as broader economic uncertainty lingers.”
