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First-time buyer prices and rents jump as mortgage costs up 22%

Characterful terraced houses on Park Parade facing Jesus Green in the city of Cambridge, UK. First-time buyers face average monthly mortgage payments that are 22% higher than two years ago. Photo: Getty
First-time buyers face average monthly mortgage payments that are 22% higher than two years ago. Photo: Getty

First-time buyer prices and rents have jumped three times faster than pre-pandemic, with asking prices up £17,557.

The average price of a first-time buyer type property hit a new record across Great Britain of £224,943, analysis from property site Rightmove revealed.

That means that an average 10% deposit needed now stands at £22,493. This is £2,560 higher than two years ago when the deposit needed was £19,934. Between July 2018 and July 2020, the deposit needed for an average first home only rose by £807.

Average asking prices for first-time buyer type properties — two bedrooms or fewer — are up by 13% or £17,557 since July 2020, compared with the 4%, or £8,069, rise between July 2018 and July 2020.

For prospective first-time buyers looking to save while renting, record rents are rising at the fastest rate ever recorded.

Read more: UK property sales fall with no impact on house prices

Average monthly rental payments are 17%, or £128, higher nationally than they were two years ago. National average earnings are up by 14% over the same period.

“Our affordability analysis highlights the many challenges first-time buyers are trying to navigate right now. For would-be first-time buyers who are trying to save up a deposit, they are chasing a fast-moving target as average asking prices for first-time buyer homes hit another new record, and rise more quickly than they did before the pandemic,” Tim Bannister from Rightmove, said.

For new first-time buyers who have been able to save a deposit, get a mortgage and secure a property, they now face average monthly mortgage payments that are 22% higher than two years ago, due to house price increases and interest rate rises.

Monthly mortgage payments for a new first-time buyer based on the current average rate is £976 — £173 more than two years ago. Average monthly mortgage payments rose just £41 in the previous two years.

“For those that aren’t able to live with parents or family members while saving, they also have to manage paying record rents both inside and outside of London,” Bannister said.

Read more: Rising house prices continue to fuel UK property boom

“We understand how difficult this challenge can be, and something we’ve seen more of over the last couple of years, particularly with working from home becoming more common, is people looking further away or at a greater number of different areas when looking to move, to see what is available within their budget.”

In a recent Rightmove survey to identify current home-mover attitudes, those planning to buy their first home said that rising house prices and soaring energy bills are the biggest challenges they are currently facing.

Nearly half (43%) hope to be able to have enough saved to buy within the next three years, with two-thirds already starting to save each month for their deposit.

Watch: Will UK house prices ever fall?