9:30 AM, 3rd May 2023, About 7 months ago 3
While house price growth has slowed to 3%, the country’s high rents mean it is cheaper for tenants to buy, research from Zoopla reveals.
The platform says that the worst of the house price falls ‘is over’ and buyer demand is continuing to recover.
Also, the supply of homes for sale has risen by 66% – that’s above the five-year average at Easter.
But, the data shows, the income needed to buy a three-bed home for a first time buyer has rocketed since 202 by an average of £7,350 to a total of £55,900
Three bed homes remain the most in demand property for first time buyers, but higher mortgage rates mean a clear shift toward two bed homes.
Zoopla says that a ‘steep rental market’ has led to first time buyers becoming the largest buyer group last year – and this cohort is expected to remain a strong source of sales this year.
Richard Donnell, the firm’s director of Research and Insight, said: “Housing market conditions continue to improve as buyers return to the market and more sales are agreed.
“House prices are posting very modest falls and are expected to be just 1% lower by the end of the year.”
He added: “The worst of the pricing adjustment appears to be behind us.
“We expect first time buyers to have another strong year in 2023 having been the largest buyer group last year.
“They need more income to buy but are starting to look for smaller homes and get away from rapid growth in rents.”
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “The property market could be emerging from the bargain basement: Zoopla is predicting that the worst of the price falls are behind us.
“First time buyers are helping to prop the market up, and with house prices rising more slowly than wages, they could remain key to the health of the market for the rest of this year too.”
She adds: “A healthy dose of realism is also easing the sales process.
“Sellers are being more pragmatic about pricing from the outset, with just under a quarter needing to cut the price after coming to the market with too much optimism.”
Iwona Hovenko, a real estate analyst at Bloomberg Intelligence, said: “Lenders’ tougher affordability checks, combined with the still-elevated house prices, mean that prospective homebuyers need to make sacrifices to buy their first home.
“This is especially true as the tough rental market is further forcing the hand of house hunters, given the fast-rising rents and the relative insecurity of this tenure.
She added: “Bloomberg Intelligence’s previous housing survey pointed to the desire to ‘stop renting’ as the strongest motive to buy a house among first time buyers (59%), especially in London (64%).”
Matt Thompson, the head of sales at Chestertons, said: “In an attempt to beat the competition, many house hunters used the Easter holidays to continue their property search and arrange a viewing for early May.
“Due to London’s chronic undersupply of properties, the market remains challenging with some properties attracting several offers from interested buyers.
“Whilst strong demand is allowing the majority of sellers to secure their asking price, buyers are often left having to compromise.
“This is particularly the case for first-time buyers or house hunters with smaller budgets.”
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