When building and selling homes it's critical to ask: Who is my target market? Identifying the target market helps inform decisions about the types of homes to build, the schemes to offer, and the focus of marketing campaigns. While not all buyers fit into neat categories, examining key market segments provides invaluable insights. In this blog post we’re going to make a start with the people at the beginning of their home ownership journey, First Time Buyers.
Defining First Time Buyers
First Time Buyers represent individuals or households seeking to purchase their first home, commonly perceived as young people, although the reality is a little more nuanced. The average age of First Time Buyers in the UK is 33, still pretty young in most people’s books, but that number has been getting higher in recent years. Despite that age group creeping up, the number of First Time Buyers increased by 19% from 2023 to 2024, and accounted for 54% of mortgaged home purchases last year.
Location Matters
When looking to build new homes the first consideration is always location, it all starts with a plot of land! First Time Buyers are scattered across the UK, but only 13% of them are aged over 45, so it is worth considering where younger adults live. The 2021 census revealed that cities in England and Wales have the highest proportions of 25-34 year olds, whilst the regions with the youngest average age are Greater London, the West Midlands and the North West. Even on local scale, larger towns appeal more to young adults than rural settings.
House Types - Meeting Preferences
To cater to the target market effectively, it is crucial to understand the types of homes that first time buyers desire. They are generally more flexible compared to other buyer groups due to limited budgets and fewer family considerations. This flexibility often leads them to opt for smaller homes. Nearly a third of first-time buyers purchased flats or maisonettes in 2022-3. Furthermore, a recent survey indicated that 43% of first-time buyers anticipate staying in their initial home for six years or less, suggesting that they are not buying homes they expect to grow with them.
Affordability
For first time buyers, affordability is likely their primary consideration when house-hunting. The home ownership rate amongst 25-34 year olds dropped from 66% in 1991 to 41% in 2021, highlighting the challenges they face. Rising house prices and rocketing rents have made it increasingly difficult for young people to achieve the necessary financial stability for home ownership. Individual developers cannot control the national housing market or the mortgage sector, but they can facilitate access to potential buyers by including affordable housing options.
Shared Ownership - Bridging the Affordability Gap
Shared Ownership schemes offer an excellent solution to bridge the affordability gap. These schemes allow first-time buyers (and other eligible individuals) to start their home ownership journey with a smaller deposit, with the flexibility to continue saving and staircase their share upwards to full ownership. It means buyers can enter home ownership sooner and leave behind the burden of high rents, as the rent paid on the remaining share is generally lower than in the private sector. With 70% of shared ownership buyers aged under 40, compared to 50% of first time buyers, this shortcut can clearly help people get on the housing ladder sooner.
First-time buyers, regardless of their age, location, or housing preferences, form a pivotal market segment. However, affordability remains a significant obstacle for them. If house prices and rents continue to rise, this issue could hinder the first-time buyer market's growth. Therefore, investment in affordable housing solutions, particularly Shared Ownership properties, is a crucial strategy for effectively targeting first-time buyers. By facilitating their first step on the housing journey, we can help them embark on a path that will shape their lives for years to come.
If you're a house builder looking for advice on marketing and selling your new homes development, get in touch with our expert team.
Sources:
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Dataloft Inform
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Lloyds Banking Group – First-time buyer market rebounds as a fifth more stepped on the ladder last year
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Office for National Statistics – Census Maps
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Statista – Median age of the population of the United Kingdom in 2021, by region
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Uswitch – 150+ UK first-time buyer statistics 2024
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Savills – Shared Ownership: A key piece in the housing puzzle
