What Does 2024 Have In Store For First-Time Buyers?

At the start of a new year, thoughts often turn to property and, if you haven't already stepped onto the first rung of the ladder, you might question whether this is your year to buy.

The UK property market in 2024 is shaping up to be an interesting one for first-time buyers, perhaps due to falling prices and improving mortgage rates. Yet, while buying your own home is an incredibly exciting prospect to think about, it is still a big financial commitment.

This article explores your key considerations before making a firm decision, along with some practical tips if you haven't bought before, and 2024's outlook for first-time buyers with regard to affordability and fluctuating mortgage rates.

New Opportunities for First-Time Buyers

The start of the year can present new opportunities if you're hoping to get your first foot on the property ladder. After years of continuously rising house prices, the market in the UK has shown clear signs of slowing down more recently. During 2023, there was an overall slump of 1.8% and house prices are predicted to fall again in 2024. According to the House Price Index, average property prices fell 1.2% in the 12 months to October 2023. These drops represented a considerable slowdown from the double-digit growth seen in previous years.

A slide in house prices does give first-time buyers an inviting opportunity to achieve homeownership. Current conditions may provide an opportunity to negotiate better deals and buy at a relatively cheaper price point compared to recent times. It's an opening some hopeful buyers have been waiting years for.

Enjoy Your Search and Take Time to Pause and Negotiate

The dynamic housing market of 2024 might be perfect if you're a first-time buyer searching for a perfect home, without the frenzied situation of buying a couple of years earlier when things were booming. The main benefit of today is being able to take your time to view multiple properties, in numerous locations, before deciding on the right home.

Allowing yourself extra time means being able to make it to as many open houses and viewings as possible, and don't rule out any potential contenders until you have seen the property inside and out while exploring the exact location. In addition, it's sensible to research your local market by checking previously listed prices against recently sold homes in the area. Slowing down in a 'buyers' market' and taking cautious steps will help you to secure a competitive price, even if the housing situation and conditions in 2024 ebbs and flows.

Ask your estate agent lots of questions and, if you are serious about buying a particular house or flat, make sure you arrange a home survey. It's important that you have the right level of survey, especially if you're purchasing a property that is old, listed, run-down or has any unusual features. Having professional insights will support you when you come to negotiate the best price and to avoid any unexpected repairs going forward.

Mortgage Rates and Help-To-Buy Schemes

In spite of the downward trend in house prices bringing good news for first-time buyers, others might remain cautious because price drops are not always realised across all regions in the UK. While the Bank of England's interest rate hikes were one factor contributing to house price cooldown, today's first-time buyers might have less purchasing power. On balance, the broader economic uncertainties coupled with rising inflation and high mortgage rates mean buyers might still remain cautious as 2024 unfolds.

The UK Government, however, has launched initiatives to help first-time buyers with affordability. In its Budget of 2024, it extended the Enhanced Help to Buy Scheme to the 31st December, 2025. The scheme was also amended to allow applicants to use their Local Authority Affordable Purchase Scheme to buy their home, plus their loans will only need to be repaid after the property is sold.

In addition, as mortgage rates remain a key factor when it comes to budgeting, the Government recognised further measures were needed to support home buyers. The Bank of England's base hikes over the last year caused mortgage rates to rise from 2% in 2021 to 5-year fixed rates of around 5.5%. With this in mind, first-time buyers should consider both fixed and variable rate options. While fixed rates offer stability, variable rates could become cheaper in the short-term if the base rate falls during 2024 and thereafter.

When budgeting, you can use online mortgage affordability calculators to assess your current income stream, your regular outgoings like loans and bills and the average property price in your ideal location. Doing these calculations will indicate what size of mortgage you can realistically obtain. In addition, you can check other online property calculators if you decide to rent out your property at some point in the future. Considering all affordability factors including help-to-buy schemes will help you to make prudent purchasing decisions even if rates and prices fluctuate this year.

Widening Your Search to Suit Your Budget

For first-time buyers, searching for your dream property is very exciting and it's common to chop and change your search radius, considering different locations or property types to buy. Most of you will weigh up the pros and cons of buying an older property versus a new-build or modern home that has more indoor space or other redeeming features. While period properties offer bags of charm and attractive cornices or beamed ceilings, they might require more money spent on them in years to come. For instance, those chocolate-box homes with thatched roofs or listed buildings with sash windows,may warrant renovating or specialist work down the line. With these thoughts in mind, consider widening your search to find the best property for your budget.

While a modern home may be preferable, an older property with scope to extend or renovate may ultimately provide greater value in the longer-term. New builds, meanwhile, tend to be more energy efficient with lower maintenance but may have smaller rooms or less garden space. Sustainable properties may include enhanced insulation, solar panels or heat pumps and eco-friendly features that reduce your utility bills. One large part of your first-time buying journey is balancing your budget with the home that ticks as many of your boxes as possible.

Whether 2024 is the right time for you to buy your first home or to remain with a rental, there will be opportunities but also risks when it comes to investing in an uncertain market this year. Whatever you decide, take your time to find the right home at the right price.

Image is from a 3 bedroom apartment just off Clapham High Straight available to let December 2023. For the full listing, please click here.