First-time buyers are increasingly opting for larger homes and longer mortgage terms as they look to lock in space for the future, according to new data from Barclays.

Semi-detached houses accounted for 33.5% of first-time buyer purchases in August, up 1.7 percentage points on last year, signalling a move away from smaller properties. Flats, by contrast, fell out of favour, making up 19.6% of purchases, down 2.7 percentage points year-on-year.

Three-bedroom homes remain the most popular choice overall, representing 46% of purchases in August.

Millennials, aged 28 to 43, are leading the shift towards more spacious “forever homes”: 22% said they bought a property with more bedrooms than they currently need, compared with 13% across all age groups. Among Gen Z buyers, a third said they chose a home they intended to keep for life.

MORTGAGE STRETCH

The trend comes as borrowers stretch mortgage terms to keep monthly payments manageable. More than 41% of first-time buyers opted for terms of 30 years or longer, while 37% of all mortgage holders said they now see extended durations as more desirable, given the lower monthly costs.

Yet over half of borrowers remain cautious about committing to longer repayments, with 60% of Millennials warning it could leave them financially vulnerable later in life.

Rising costs continue to shape buyer behaviour. Homeowners reported mortgage payments accounted for 27.7% of take-home pay in August, up from 26.6% in July. Four in ten homeowners said their repayments take up too much of their monthly income.

Housing confidence showed tentative signs of recovery, with 29% of consumers expressing optimism in August, up from July’s six-month low of 26%.

AFFORDABILITY PRESSURES

However, affordability pressures remain widespread. Mortgage and rent spending rose 4.4% year-on-year in August, although this marked a slowdown from 5.2% in July, following the Bank of England’s recent base rate cut.

Renters remain particularly exposed: 61% have already seen or expect higher housing costs this year, limiting their ability to save. Almost half cited high house prices as the biggest obstacle to ownership, up sharply from 38% in July.

Even so, optimism among renters is edging up. Some 22% now believe they could buy a home within five years – the highest level since February – offering a glimmer of hope that the dream of ownership remains within reach.

COST-CONSCIOUS

Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, said: “Our data shows that first-time buyers are not considering property merely to get a ‘foot on the ladder’ but for the long term.

“Whether it’s to create space for a growing family, or to invest for the future, it’s encouraging to see young people feel slightly more confident in taking this significant step.

“It’s clear that buyers are still cost-conscious as 30+ year mortgage terms become more popular – this option helps consumers reduce their payments by stretching their borrowing over a longer period of time.”

AUTUMN BUDGET CONCERNS

And Julien Lafargue, Chief Market Strategist at Barclays Private Bank and Wealth Management, added: “Despite facing challenges, the UK economy continues to demonstrate resilience.

“Our data shows that a period of caution is emerging, with over half of businesses delaying investment decisions until after the Autumn Budget, and consumers are also taking a ‘wait and see’ approach as they anticipate any changes that may lie ahead.

 “However, looking beyond the immediate horizon, the combination of economic factors such as moderating inflation, and a more accommodative stance from the Bank of England should provide a supportive backdrop for the housing market. These considerations may help sustain demand and improve affordability, even as broader economic uncertainty lingers.”