First-time buyers are now paying much more to get on the property ladder as the average cost of a first home has now hit an all-time high. As well as increased mortgage rates, new homeowners are new facing higher house prices with a typical first-time buyer property now costing around £224,963.
According to Rightmove, a standard first-time buyer home is a two-bed or smaller property including houses or flats. The new record high comes after the average price for these properties has gone up by 2 percent in the last year alone.
Despite it becoming more difficult to own your own home, buyer demand amongst first-time buyers is now 11 percent higher than in the same period in 2019, according to Rightmove. It is thought that as soaring rents are reaching new records, buying is continuing to be compelling for those who can raise the deposit and obtain a mortgage.
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In more positive news, the average first-time-buyer mortgage rate for a 5-year fixed term has now fallen to 4.46 percent.
Rightmove says lender competition to secure business is now strongest in the traditional first-time buyer loan-to-value ranges of 85 percent and 90 percent.
"The first-time-buyer sector typically accounts for over a third of all sales which are often the start of chains, so these positive sales agreed figures are good for the health of the whole market," said Tim Bannister, Rightmove’s director of property science.
"The current multi-speed market is highlighted by sales of larger homes continuing to lag behind, with some sellers in the upper sectors likely needing to show a greater degree of pricing restraint to attract buyers in this much more price-sensitive market.
"More competition amongst lenders in the smaller deposit, higher loan-to-value ranges is positive news for those would-be first-time buyers who have saved up their deposit and can still afford to move.
"However, it remains a challenging environment to get onto the ladder, with new record average asking prices and higher borrowing costs to budget for than a year ago.”
Elsewhere in the property market, the average price of a standard property has risen by just 0.2 percent to £366,247, which is lower than the average increase of 1.2 percent around this time of year.
This is a sign that many new sellers are taking note of the economic headwinds and the transitioning of the housing market to a slower pace and more normal activity levels, last seen in the pre-pandemic market of 2019.
Rightmove also says the number of house sales is 18 percent behind the busy market that it was last year as the UK now transitions to more 'normal levels' of buying activity.
Tim Bannister, Rightmove’s Director of Property Science, said: “Agents are reporting that many sellers have transitioned out of the frenzied multi-bid market mindset of recent years and understand the new need to tempt Spring buyers with a competitive price.
"The current unexpectedly stable conditions may tempt more sellers to enter the market who had been considering a move in the last few years but had been put off by its frenetic pace.
"Buyers may have struggled to find a home that suited their needs in the stock-constrained market of recent years and will now find more choice available.
"However, those who have now decided to make a move should not wait around too long to make an enquiry if they see the right home for sale, as not only is the number of sales agreed now back to pre-pandemic levels, but homes are also on average selling twelve days more quickly than at this time in 2019.”
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