The rental market is likely to see continuing high demand as first time buyers battle increased house prices and higher mortgage rates, a new survey suggests.
Reallymoving says first time nuyers in the UK are now paying almost a third more for their first home than they were five years ago, with the average purchase price jumping from £216,000 in 2018 to £284,000 in 2023.
By comparison, government data shows average UK wages have increased by just 11.6 per cent over the same period, highlighting what Reallymoving calls “the growing affordability gap.”
Chief executive Rob Houghton says: “The significant increase in the price of a first home and the much slower increase in wages over the last five years lays out in black and white the scale of the challenge for First Time Buyers. Many will be making a deliberate choice to sit on the side lines and hope that prices fall, but our data shows that despite multiple economic challenges, there’s little sign of first time buyer prices softening.
“Trying to time the market can be difficult and if prices do fall, lenders become nervous, usually leading to higher mortgage rates which make it harder to find a loan you can afford. The best time to buy is when you personally are ready and able - and plan to stay there for at least three to five years if you can, to ride out any short-term fluctuations.”
FTBs in the North West of England have seen the largest percentage price increases over the past five years, with the average purchase price rising 39.4 per cent from £155,000 in 2018 to £216,000 in 2023, closely followed by the East Midlands, where the average FTB purchase price has risen 31.7 per cent over the same period.
In comparison, average FTB purchase prices have increased by just 16 per cent in London and 13.6 per cent in the South East since 2018.
London remains the most expensive place to buy a first home, costing £463,000 on average, yet it’s also the top FTB activity hotspot, accounting for 19 per cent of all new homebuyer purchases.
Houghton adds: “Price increases have been higher in the Midlands and North over the last few years than in London and the South East, the traditional engine house of the UK housing market. With homebuyers in the south reliant on larger and more expensive mortgages – and often the generosity of the Bank of Mum and Dad - house price growth is likely to remain constrained for the time being.”
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This rings true for me, we are selling one of our mortgage free BTL’s to split between the kids so they can get on the housing ladder….. of course there is an eviction in there as well 😱 this is the nature of our current market, I do feel for adult children without parents that can do what we are doing….. tougher times ahead.
Could the average price FTBs have paid over the last 5 years have risen because they simply aren't buying traditional FTB properties?
Several of my tenants have bought using the HTB scheme and nearly all of those properties were 3 or 4 bedroom houses. Only 2 of them bought 2 bedroom houses. None of them bought flats. Most of those properties cost between £275000 and £325000.
In this area a traditional FTB property costs between £130000 and £200000.
Jo we started at the bottom and worked up, my first house was a £5k wreck in 1979, todays FTBs want it all now, new turn key properties with no work to do, that costs money
Simon Logan -Adult children without parents ?
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