That’s the verdict of a recent Santander survey which has now been analysed by the investment platform, BuyAssociation.
The platform chief executive, Caroline Marshall-Roberts, says: “This study reinforces what we’re seeing in the market. Sentiment is giving way to functionality and affordability. Buyers are prioritising access to the property ladder over securing their ‘forever home’. This is evident in the fact that the average stay in a first home is just four and a half years.”
She says there are several key reasons behind this mindset shift and what it means for investors.
Affordability takes centre stage – One of the clearest drivers is the rising cost of property and mortgage rates, which often puts buyers’ ‘ideal homes’ out of reach. By purchasing a more affordable property, first-time buyers can build equity and progress up the ladder. With house prices still high relative to wages, particularly in cities, compromises on size and location are common.
More than two-thirds of the survey respondents cited location as a primary influence on their purchase, with affordability often pushing buyers to less desirable areas.
Urgency to get on the ladder – The perception that house prices are outpacing incomes is pushing buyers to enter the market as soon as possible. This sense of urgency leads many to settle for smaller homes or less central locations in order to get a foot on the ladder.
Concerns about rising interest rates and potential future market barriers are fuelling this behaviour. Stamp Duty, for instance, remains a challenge, especially after the threshold for first-time buyers was reduced from £425,000 to £300,000 earlier this year, making it harder for buyers in high-demand areas like London.
Studios and terraces on the rise – Demand is growing for entry-level homes, such as studios, one to two-bedroom flats, and compact terraced houses, particularly in London, Manchester, and Leeds. Far from being compromise purchases, these homes are often seen as calculated, strategic decisions, as they offer the most accessible route onto the housing ladder, especially in high-demand cities.
From an investor’s perspective, these property types offer strong appeal due to their consistent demand and faster resale potential.
What this means for investors – With many first-time buyers moving on within four to five years, demand is rising for ‘second-step’ homes, typically medium-sized properties in commuter-friendly areas. These buyers are often driven by lifestyle shifts, including starting a family or moving to hybrid working, and may now have sufficient equity to upgrade.
This creates opportunities for developers and investors to cater to demand by delivering well-located, lifestyle-oriented homes, from compact flats to spacious family houses. As second-steppers move on, their former starter homes also re-enter the market, creating a fresh supply of competitively priced properties for the next wave of buyers.
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