11:41 AM, 19th October 2015, About 6 years ago
High demand is reported to be fueling increases in price for “First Time Buyer” property (two bedrooms or fewer) in a survey of house prices from Rightmove. Prices for these starter properties are up 4.9% on last month and 9.6% overall for the year.
The national average price of all property coming to the market has increased 0.6% this month to £296,549, which is 5.6% more expensive than 12 months ago.
The number of first time buyer properties coming on to the market was actually down by 8% on last year. An inability to move on and upwards from starter homes is now having a detrimental effect on supply along with a vicious circle of high tenant demand leading to Buy to Let investors competing with first-time buyers according to Rightmove.
Rightmove director and housing market analyst Miles Shipside said: “There are signs of a slowing pace of price rises in some sectors of the market, with the overall October rise the lowest we’ve recorded at this time of year for five years. We still have another national average record however, as prices continue their upward trend. This is mainly being fuelled by the heady price rises of typical first-time-buyer homes. A near 10% price surge in this category in the last year proves that despite tighter lending criteria in last year’s Mortgage Market Review, some first-time buyers can still afford the higher prices being asked for by sellers in this sector. It’s also symptomatic of a shortage of properties coming to market with two bedrooms or fewer, combined with demand from both first-time buyers and landlords investing in reaction to the huge rental demand for smaller properties.”
“Letting agents report extraordinary demand from tenants in many parts of the country, with new or existing households looking to the rental sector to fulfil their need for quick and flexible housing arrangements. A growing number of people like the transience of renting, without the complications, commitments and costs of buying and then selling. With inadequate supply from housing associations and the public sector, private landlords are one of the few active providers of smaller homes for rent. However, when this need is combined with first-time buyer demand, boosted by the return of low-deposit mortgages and lenders competing to reduce their rates, it creates a vicious circle due to the limited supply of suitable properties for sale in this most active sector. The number of first-time-buyer properties (two bedrooms or fewer) coming to market is down by over 8% on the same period a year ago.”
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