Rightmove's data analysis reveals how much they have risen
Asking prices and asking rents for first-time buyer type properties – those with two bedrooms at most – have risen three times faster compared with pre-pandemic years, new analysis from property listing platform Rightmove has revealed.
First-time buyer average asking prices are up 13%, or an equivalent of £17,557, since July 2020, compared with the 4%, or £8,069, rise between July 2018 and July 2020.
Meanwhile, Rightmove said prospective first-time buyers who are renting now face the challenge of record rents rising at the fastest rate ever recorded. Average monthly rental payments are 17%, or £128, higher than they were two years ago.
First-time buyer type properties have hit a new record average asking price of £224,943 across Great Britain. Therefore, an average 10% deposit 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.
Read more: How much do first-time buyers pay compared to existing homeowners?
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, which is £173 more than two years ago. Average monthly mortgage payments rose just £41 in the previous two years.
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 were the biggest challenges they are currently facing. Over four in 10, or 43%, hope to be able to save enough to buy within the next three years, with two-thirds already starting to save each month for their deposit.
Despite the challenge, there are still 35% more people enquiring to buy first-time buyer homes now than back in the last more normal market of 2019.
Read more: Britain’s first home market unaffordable for majority of buyers - report
“Our affordability analysis highlights the many challenges first-time buyers are trying to navigate right now,” Tim Bannister, data expert at Rightmove, commented. “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.
“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.”
Bannister said that 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.
