First-time buyers in the UK are increasingly targeting higher-priced homes, a trend that is contributing to a rise in house price inflation despite a general slowdown in buyer enquiries. New data from Zoopla reveals that while fewer first-time buyers are actively searching, those who are remain determined to purchase properties above last year’s price levels.

First-time buyers driving up prices

Zoopla’s latest House Price Index shows that first-time buyers are seeking homes priced on average £10,000 higher than twelve months ago. Across the UK, the average price of properties targeted by first-time buyers has risen by 4.3% to £254,750, significantly outpacing the wider market’s modest 1.5% increase, where the average home is valued at £271,900.

In London, this trend is particularly pronounced, with the average property sought by first-time buyers surpassing the £500,000 mark for the first time, now standing at £502,250. This is despite overall average prices in the capital remaining flat year on year.

Regional variations in house price inflation

While London and the South East have seen prices remain steady or decline slightly, northern regions continue to experience stronger annual price growth. For example, Scotland has recorded a 7.9% increase in average prices sought by first-time buyers, and the West Midlands has seen a 7% rise. The South West, by contrast, has experienced the smallest increase at 1.9%.

These regional differences reflect ongoing economic and market dynamics, with northern markets maintaining momentum even as southern areas face more subdued conditions.

Fewer first-time buyers but higher value targets

The number of first-time buyer enquiries has dropped by 6% compared with last year, influenced by higher mortgage rates and economic uncertainty. However, those still searching have not shifted towards smaller or cheaper properties. Outside London, 53% of enquiries remain for three-bedroom houses, consistent with last year’s figures. In London, flats continue to dominate first-time buyer interest, accounting for over half of enquiries.

Zoopla attributes some of this willingness to pursue pricier homes to changes in mortgage affordability testing introduced last year, which have broadened the range of properties accessible to first-time buyers.

Sales and market activity

Despite a 10% reduction in buyer demand across the wider market, the number of sales agreed is running 1% ahead of last year—the first positive annual figure recorded in 2026. New listings have also increased by 3.4% year on year. House price inflation has edged up slightly from 1.4% to 1.5%, with northern regions, Scotland, and Wales seeing annual increases between 2% and 3.6%.

London stands out with an 8% rise in sales agreed year on year, even though the number of homes for sale in the capital is 13% higher and house price inflation remains flat after six months of modest declines.

Industry perspectives on the current market

Nathan Emerson, CEO of Propertymark, noted: “Although overall buyer demand remains below last year’s levels, it is encouraging to see agreed sales edging ahead as committed movers continue to drive activity across the housing market. First-time buyers remain a crucial part of the market, and the fact that many are aiming for higher-value homes demonstrates ongoing confidence and determination to get onto the property ladder despite affordability pressures.”

Marc von Grundherr, director of Benham and Reeves, highlighted London’s resilience: “While headline house price growth across the capital remains largely flat, the fact that sales agreed are up 8% year-on-year tells a very different story beneath the surface. Buyers remain active, but they are also more price conscious and selective than they were during the market highs of recent years.”

Verona Frankish, CEO of Yopa, added: “The latest market data shows that the UK property market continues to hold up remarkably well and, importantly, transactional activity is moving in the right direction. The fact that sales agreed have edged ahead of last year for the first time in 2026 is an encouraging sign that committed buyers and sellers are continuing to press ahead despite a more cautious wider backdrop.”

Jeremy Leaf, a north London estate agent and former RICS residential chairman, observed: “Zoopla has confirmed what we have been seeing in our offices over the past few months: a drop in buyer demand, but those who are in the market are serious about moving — it really is a case of quality over quantity.”

Tomer Aboody, director of property lender MT Finance, commented: “Where we have some positive signs is in the first-time buyer market. Despite a fall in number, they are prepared to push themselves further than they were 12 months ago and pay slightly more in order to get on the ladder.”

Tom Bill, head of UK residential research at Knight Frank, forecast: “Higher mortgage rates mean the UK housing market will come under gradual and sustained pressure this year rather than produce a cliff-edge moment. Buyers sitting on mortgage offers that pre-date the Middle East conflict feel a sense of urgency to act while others have seen their spending power eroded.”

What this means for landlords

The trend of first-time buyers targeting pricier homes despite economic uncertainty suggests a continued demand for mid-range and higher-value properties, particularly in northern regions and London flats. Landlords may find opportunities in these segments as committed buyers maintain transactional activity even amid broader market caution.

However, the overall reduction in buyer enquiries and the cautious stance of many households underline the importance of realistic pricing and flexibility in negotiations. Increased stock levels, especially in London, are giving buyers greater negotiating power, which could temper rental and sale price growth in some areas.

Source: Based on reporting from Property118

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