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First-time buyers face increasingly impossible housing ladder task

·2-min read
First-time buyers are being cornered by a runaway property market   (Daniel Lynch)
First-time buyers are being cornered by a runaway property market (Daniel Lynch)

First-time buyers are facing a steep jump to get on to the first rung of the housing ladder and renters are facing crippling hikes simply to keep a roof over their heads, according to the latest data released by property platform Rightmove.

The property specialists have revealed unnerving information that first-time buyer asking prices and equivalent asking rents have risen three times faster compared with pre-pandemic years.

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

Average monthly rental payments are 17% higher, or £128, nationally than they were two years ago.

Asking prices for first-time buyer properties  in the range of two bedrooms and fewer have risen 13%, or £17,557 on average, since July 2020. This is compared to the 4%, or £8,069, rise between July 2018 and July 2020.

First-time buyer type properties have now hit a new record across Britain of £224,943. Therefore, 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.

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

Tim Bannister, director of data services at Rightmove, said: “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. 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.”

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.

Despite the challenge, there are still 35% more people enquiring to buy first-time buyer homes now than in 2019 before the pandemic. This compared to a 26% increase for all property types.

Bannister added: “Those that have been able to save up a deposit are now facing rising interest rates when considering what they can afford to repay each month. Given the economic uncertainty at the moment, first-time buyers may seek some financial certainty by locking in a longer fixed-rate mortgage term now, before interest rates rise again.”

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