First-time buyer asking prices and rents rise three times faster than pre-pandemic

Asking prices for typical first-time buyer homes and equivalent rents have risen three times faster compared with the pre-pandemic years, Rightmove data has revealed.

Analysis by the portal has found that average asking prices for first-time buyer type properties – those with two bedrooms and fewer -a re up 13% since July 2020, compared with a 4% rise between July 2018 and July 2020.

For prospective first-time buyers looking to save while renting, they face the challenge of record rents that are rising at the fastest rate ever recorded, Rightmove said.

Average monthly rental payments are 17% higher nationally than they were two years ago. 

National average earnings are up by 14% over the same period.

Asking prices for first-time buyer type properties have hit a new record across Great Britain of £224,943, according to Rightmove.

Therefore, an average 10% deposit needed 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.

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, £173 more than two years ago, according to the research

Average monthly mortgage payments rose just £41 in the previous two years.

In a recent Rightmove survey to identify current homemover attitudes, those planning to buy their first home said that rising house prices and soaring energy bills are the biggest challenges they are currently facing. 

Nearly half (43%) hope to be able to have enough saved 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. 

This compares with a 26% increase for all property types.

Tim Bannister, data expert for Rightmove, said: “Our affordability analysis highlights the many challenges first-time buyers are trying to navigate right now. 

“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.

“Those that have been able to save up a deposit are now facing rising interest rates when considering what they can afford to repay each month. 

“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.”

Commenting on the figures, Richard Davies, managing director of London agent Chestertons, said: “The market has also seen a trend of tenants extending their rental agreement. The reasons vary, with some renters realising that demand has pushed rents up considerably, which makes staying put financially more viable. London’s rental market in particular has seen unprecedented demand that is outstripping supply.

“This has created an extremely competitive market for tenants and many have begun offering landlords more rent than they are asking in order to secure a property. Other renters are worried about the cost of living and wider economic uncertainty which prevents them from taking on a costly move.”