First-Time Property Buyers See Hope Amidst Rising UK House Prices Since The Pandemic

First-time buyer asking prices and equivalent rents have increased by three times as much compared to pre-pandemic years.

The average asking prices for two bedrooms and fewer are up 13% or £17,557 since July 2020, versus the 4% increase between July 2018 and July 2020.

To date, first-time buyer-type properties across Great Britain have hit a new record of £224,943, resulting in an average 10% deposit of £22,493.

UK House Prices

Compared to two years ago, with a deposit only amounting to £19,934, it is now £2,560 higher. Between July 2018 and July 2020, the average first home deposit increased by only £807.

Meanwhile, tenants face the challenge of high record rents with an average monthly rental payment of 17% higher than they were two years ago. 

For tenants, this means they should expect even higher rents soon, and for first-time property investors, a steady increase in UK house prices means a rise in property value over the next few years, as well as a higher rental income and cash flow.

Property Platform Rightmove Reveals Unnerving Data On Mortgages

The average first-time buyer with a two-year fix now faces monthly mortgage payments of 20%, which is +£163 higher compared to the start of the year, and now stands at £976 per month.

To achieve more certainty about these outgoings, buyers can opt-in to longer mortgage terms, which is now viable as lenders now offer the same rate for two-year and five-year fixed mortgages.

Rightmove’s 2022 House Price Forecast Revised From 5% Growth To 7% Despite The Cooling Market

Following their latest analysis, Rightmove has revised its full-year 2022 house price growth forecast upwards from 5% to 7%, as record low stock volumes can’t meet buyer demand.

This means better opportunities for investors who plan to kickstart building their portfolios as there would still be plenty of upward momentum in the market, especially in prime regional centres and commuter towns. 

More Insights On The Challenges Of First-Time Buyers 

Rightmove’s data expert, Tim Bannister, said that those would-be first-time buyers trying to save up a deposit are chasing a fast-moving target as the average asking prices for first-time buyer homes continually rise more quickly than before the pandemic.

He also added that this challenge makes people look for properties further away from the capital or in a greater number of different areas to see what is available within their budget. 

Bannister added that people saving up for a deposit are now facing rising interest rates when considering what they can afford to repay each month. And to counteract this economic uncertainty, first-time buyers may have financial certainty by locking in a longer fixed-rate mortgage term before interest rates rise again.

What First-Time Buyers Can Do To Invest With Certainty During Rising UK House Prices? 

As UK house prices continue to rise, so does the number of choices available in the property market with potential for capital growth. 

There are a lot of thriving areas inside and outside of London with new build and off plan properties that have excellent investment fundamentals, which will provide high capital growth and rental yields for property investors.

To know more about these opportunities, chat with our team on 02079236100, and build your solid strategy and plan about how you can get ahead with your portfolio amidst the rising UK house prices.

Brett Alegre-wood
July 25, 2022

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