First-time buyers will need £12,250 to buy a home

The real estate company said that, despite this, demand for new homes is beginning to weaken as mortgage rate rises and the increasing cost of living begins to bite. Mortgage rates for new buyers are now at four percent, meaning the average first-time buyer will need an extra £12,250 to buy a home in 2022 when compared to a year ago. 

Overall, buyer demand has started to fall but remains well above the five-year average - tracking at +17%. However, that demand has come down from a peak of +54% in May earlier this year and is likely to continue to weaken throughout the rest of 2022. 

Demand is now below what was seen this time last year when the stamp duty holiday was still in place. Additionally, the summer slowdown and increased economic uncertainty are beginning to make an impact. 

First-time buyers purchasing homes are changing the buying landscape, with interest from first-time buyers in July 2022 being up 46% year-on-year. Alongside this, rising house prices have done little to dent demand among this buying group - despite the average price for a first-time property rising by £33,000 to £269,000 year-on-year. 

These buyers are now accounting for one in every three property transactions, and are now going to be able to look further afield in cheaper areas to buy a home. Its data shows many are also looking at bigger and more expensive homes, with three-bedroom properties accounting for more than half of all first-time buyer enquiries. 

According to Zoopla, higher mortgage rates will mean larger monthly repayments - and the need for a greater household income to meet the increased costs. Moving from a two percent mortgage rate to four percent means the average first-time buyer will need an extra £12,250 - with London seeing increases of more than £34,500.