The proportion of first-time buyers spending more than £1million on their homes has doubled in the past year.While they still only represent a small n
The proportion of first-time buyers spending more than £1million on their homes has doubled in the past year.
While they still only represent a small niche, with two per cent of buyers spending a seven-figure sum on their first home in 2020, that compares to one per cent the year before, according to data from the estate agent Hamptons International.
Based on Halifax data which said that 304,657 people got on the property ladder last year, this would represent 6,093 first-time buyers.
Hamptons also looked at the number of first-time buyers who spent more than £500,000 on their homes. This had remained stable at four per cent in 2017-19, but rose sharply to seven per cent in 2020. In the South this increased to 15 per cent, and in London 33 per cent.
Key asset: The number of first-time buyers spending seven-figure sums increased in 2020
The proportion increased to eight per cent in London and four per cent in the South East.
Five years ago, the proportion of first-time buyers paying more than £1million was so low that the average figure for the UK was zero per cent.
Areas with the highest proportion of £1million-plus first-time buyers included Westminster in London, where two thirds spent a seven-figure sum, as well as Hammersmith and Fulham in London and Sevenoaks in Kent, where half of buyers did.
Seven per cent of first-time buyers now spend more than £500,000 on their home
Other places where at least a third of people getting on the property ladder spent £1million or more included Reigate and Banstead in Surrey (42 per cent), South Buckinghamshire (40 per cent), Barnet in North London (38 per cent), Kensington and Chelsea in West London (33 per cent), and Chiltern, also in Buckinghamshire (33 per cent).
Like many, the super-wealthy found they wanted more space after spending more time at home throughout the repeated lockdowns.
Joanna Cocking, head of prime country sales at Hamptons, told This is Money that the increase had been driven by high-net-worth professionals deciding to move from luxury rentals in London to large pads in the countryside.
‘In the last year there has been a change in the environment,’ she said. ‘I don’t think I have ever seen so many first-time buyers with so much money to spend, and they are all coming from London.’
She also said that these first-time buyers were not always in their twenties and thirties.
A home in Chiltern, Buckinghamshire, where a third of first-time buyers spent at least £1m
‘The average age of the first-time buyer is not what one might imagine,’ she said.
‘There is a perception that most people buy in their twenties, when there is a limit to how much you can afford.
‘In the prime market, I often meet high-net-worth individuals with large budgets who are older than that but are still buying for the first time.
‘Their job might have evolved, they might be doing less travelling or their relationship status might have changed, and they have decided that a rental no longer suits their lifestyle.’
The Hamptons data showed that the average amount spent by a first-time buyer across the UK was much lower.
In 2020, the average first-time buyer spent £253,700 getting on the property ladder
In 2020 they spent £253,700 on average to get on the property ladder, an increase of more than £33,000 compared to the previous year.
In 2021 to date, those buying their first home have spent slightly more again, with the average price coming in at £255,260 according to Hamptons.
In the South, however, the average price being paid by a first-time buyer has fallen from £360,640 in 2020 to £352,800 in the first few weeks of this year.
Coutts’ wealthy clients were keen to buy
Other figures released this week suggested that wealthier people continued to invest in property in 2020, despite restrictions on viewings and the challenging economic outlook.
The private bank Coutts said it had seen a rise in buying activity in main homes, second homes and investment properties among its clients, when compared to previous years.
Peter Flavel, the chief executive of Coutts, said that lifestyle changes led many of the bank’s clients to re-consider their living arrangements.
‘I know from my conversations with our clients over the last six to eight months that many are reassessing how they live and work,’ he said.
‘A lot of them are looking at their homes thinking about whether they match up to their lives today.
‘Our clients have found that their homes have increasingly had to become school rooms, workplaces and social spaces. It’s not surprising that they’ve been looking for more space.’
This, he said, could result in a drop in demand for properties with a smaller footprint.
Oxford was one of the most popular locations for Coutts’ clients to buy a new home
‘Schools will go back, and restaurants and pubs will re-open,’ he said. ‘But working from home could be here to stay, and the home cinema could be about to take the place of the multiplex in many people’s lives. This could make smaller properties less attractive.’
Outside of London, the most popular areas where the bank provided new mortgages for main homes were Kingston upon Thames, Guildford and Oxford.
It also recorded a big increase in interest in buying holiday homes, on the back of the popularity of staycations throughout 2020.
The number of holiday homes purchased by its clients increased by 43 per cent in 2020, compared with the year before.
The most popular locations included Guildford, Tunbridge Wells, West Cornwall and Gloucester.