UK first-time buyers shift focus to regional cities

The assumption that the pandemic would permanently reset Britain’s housing geography—from dense cities to tranquil coastlines—was premature. New data shows that first-time buyer demand in British cities has not only rebounded but surpassed pre-pandemic levels. Inquiries for starter homes in urban centers are up 16% compared to 2015, according to property portal Rightmove.

This is not a reversion to the mean. It’s a recalibrated signal: affordability and livability in cities still drive demand, even amid elevated prices, flexible work, and lifestyle diversification. From Dundee’s 176% surge to a consistent climb in Edinburgh, Doncaster, and Liverpool, the shift reveals a capital logic that policymakers—and institutional investors—cannot ignore.

At the height of the pandemic, headlines fixated on the “race for space.” Rural villages and coastal towns from Cornwall to Colwyn Bay captured the imagination of a homebound nation. The perception—amplified by estate agent anecdotes and selective data slices—was that cities had lost their gravitational pull. That narrative now appears overstated.

While some individuals did relocate, what’s becoming clear is that most first-time buyers never truly abandoned cities. They paused. Remote work loosened their geographic leash, but not their economic constraints. Urban amenities, job access, and social infrastructure remained attractive. The cities themselves adapted—softening commuting norms, expanding green spaces, and cultivating cultural relevance. Cities didn’t shrink. They evolved.

The real story isn’t a nationwide urban revival. It’s a selective, affordability-led reawakening. Dundee stands out not just because of its cultural regeneration, but because it remains within reach for a first-time buyer. In April 2025, the average purchase price for a first-time buyer in Dundee was just under £121,000—far below the UK average of £223,400.

Contrast that with London, where first-time buyer demand is down 7% over the past decade. The capital’s housing prices have outpaced wage growth for years. This isn't simply about preference—it's about exclusion. Cities like Dundee and Liverpool offer viable entry points into ownership, while London functions increasingly as a capital preservation zone for global wealth.

That divergence is reshaping demand flows across the UK. Mid-sized cities with below-average home prices, walkable density, and university or cultural anchors are emerging as new demand centers. They're not absorbing overflow—they're now foundational to first-time buyer strategy.

This shift in demand should prompt a parallel shift in housing policy. For the past decade, too much emphasis has been placed on boosting supply without matching it to demand geography. Cities with rising first-time buyer interest need more than housing starts—they need targeted funding, transport investment, and regional development schemes that recognize them as economic gateways, not hinterlands.

Moreover, the planning discourse must move beyond London exceptionalism. While the capital remains an economic engine, its housing market is increasingly decoupled from real household formation. Treating the UK housing market as a monolith anchored by London misses the dispersion of capital and ambition now evident in regional markets.

Policymakers should view this trend as an opportunity. It offers a path to rebalance economic development across Britain without artificial interventions. But it requires aligning infrastructure, tax incentives, and institutional financing tools to support rising urban hubs.

From a macro-capital perspective, this reorientation holds strategic significance. Pension funds, housing trusts, and sovereign investors have long favored London and the South East for residential portfolios. But with affordability capping growth and regulatory scrutiny intensifying, the return profiles of these markets are flattening.

Cities like Dundee and Doncaster—once overlooked—now present compelling fundamentals: low entry prices, improving livability metrics, and increasing demand from younger cohorts. If capital allocation does not follow this emerging pattern, investors may find themselves overweight in saturated markets and underexposed to growth corridors with better alignment to demographic needs.

This is not about chasing yield in unfamiliar postcodes. It’s about recognizing that the new housing frontier in Britain is not rural retreat—it’s affordable, well-positioned mid-tier cities that still serve as realistic launchpads for working-class ownership.

The return of first-time buyer demand to cities is not a nostalgia play. It reflects a hard reset in how young households assess tradeoffs: between space and transport access, between price and opportunity density. While the countryside may still lure second-home buyers and retirees, cities are where the functional economic life for new entrants continues to consolidate.

Rather than a retreat from cities, the pandemic accelerated a sorting mechanism—where only certain cities retained or rebuilt relevance. The ones that did—often those with intact affordability and strong cultural or academic anchors—are now reaping the benefits.

This shift underscores a broader reality for policymakers and capital allocators: resilient urban demand cannot be engineered overnight, but it can be supported through deliberate infrastructure, planning, and financing alignment. The trendline may not be flashy, but it is foundational—and increasingly irreversible.

This rise in city-bound first-time buyer interest is not simply a bounce—it is a structural realignment. It calls for capital flows, policy instruments, and planning priorities to evolve accordingly. Britain’s housing story is no longer just about London or lifestyle migration. It is about the cities quietly winning the next generation of homeowners—not by accident, but by design.