First-time buyers are shunning flats in favour of houses, even if it requires shelling out more cash.
Data from property website Zoopla reveals that first-time buyers are buying homes worth £10,000 more than a year ago.
The average price they pay has increased by 4.3 per cent to £254,750 year-on-year in April, meaning they are borrowing more despite higher mortgage rates ratcheting up monthly payments.
This is nearly three times the headline rate of annual house price growth of 1.5 per cent, which means the average home now costs £271,900.
Zoopla said higher prices paid by first-time buyers had contributed to a rise in house price growth, which increased from 1.4 per cent in March.
Aiming high: First-time buyers are shelling out more for larger homes, Zoopla says
First-time buyers seek bigger homes
Outside of London, three-bed houses now account for 53 per cent of all first-time buyer enquiries, according to Zoopla, up from 41 per cent in 2017.
One-bed flats have fallen from 7.6 per cent of enquiries in 2017 to less than 6 per cent today. Two-bed flats have also drifted down.
In London, flats make up more than half of the housing stock – and yet first-time buyers’ appetite for flats still seems to be waning.
Two-bed flats remain the top choice for first-time buyers at around 31 per cent of enquiries, but three-bed houses have grown from 20 per cent in 2017 to 24 per cent today.
This is at the expense of one-bed flats, on which enquiries have have fallen from 20 per cent in 2017 to 17 per cent now.
Average first time buyer house prices in the capital crossed the £500,000 mark for the first time at £502,250, which was £15,000 higher than last year.
In much of the capital city average house prices have not moved, while the price of flats has actually fallen.
Richard Donnell, executive director at Zoopla, said: ‘The shift toward larger homes accelerated notably between 2020 and 2022 – likely pandemic-driven – with three-bed houses outside London peaking at 48 per cent in 2021.
‘What is notable is that first-time buyers have largely held onto those preferences even as rates rose sharply from 2022.
‘The one-bed flat has been in decline as a first-time buyer property type for most of the past eight years both in and outside London as people take longer term mortgages and consider staying in their first home longer.’
