More than half of first-time buyers are buying either a studio flat or a property with 1-2 bedrooms to get their foot on the property ladder, according to a survey of 2,000 homeowners carried out for Santander.
This is despite 18% of first-time buyers having at least one dependant.
Sacrifices on space (37%) and location (18%) were cited as the driving factors for those wanting to move on to their second home.
Data from the lender revealed that a lack of suitable properties and affordability constraints pushed two-thirds (67%) of first-time buyers to purchase in an area they had never seen before.
Improving access to mortgages and looking for alternative ways to assess affordability are a focus of the Financial Conduct Authority’s (FCA’s) Mortgage Rule Review, which aims to simplify and increase the flexibility of its rules.
Why Life Insurance Still Matters – Even During a Cost-of-Living Crisis
Sponsored by Post Office
The trend is in stark contrast to older generations – one in five households aged over 80 still live in their first property.
‘Pragmatic’ attitude to first home
David Morris, head of homes at Santander UK, said: “While many of us might feel sentimental about the day we got our first set of keys, the new wave of more savvy first-time owners seems to be increasingly pragmatic about their first home purchase.
“Given the ever-present affordability challenges faced by today’s first-time buyers, many are finding that the only way to get onto the housing ladder is by making compromises on space or location. Once that first foot is secure, their pragmatism is paying off, as many find they can quickly move on to a property better suited to their long-term needs.
“Checking that you can port your mortgage product and getting to grips with the cost of moving up the ladder are key for those buyers already looking one step ahead.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: First-time buyers’ sacrifice on space drives them up property ladder in fewer than five years
