First-time buyers have been dealt another blow as figures released by property agent Rightmove reveal that the typical asking price of a first-time home has risen by 6.2% over the month to May.
Despite belief that the 1 April stamp duty deadline would lead to downward pressure on prices at the lower end of the market - estate agent code for places with two bedrooms or fewer, and in this case, excluding inner London – today’s data says otherwise.
It appears that the 80% rise in transactions seen in March has added to what Rightmove terms a ‘property drought’. This staggering monthly rise - 6.2% (£11,298) - is the result, taking asking prices for first-time buyers to £194,224. Annually, first-time buyer property prices rose by 11.4% in May
In what will come as no surprise to anybody, the biggest asking price increases were seen in towns with routes into London – Croydon, Dartford and Luton saw price rises of 18% over the year.
National asking prices across the board meanwhile, have risen by 0.4% (£1,118) over the month, and by 7.8% annually, taking prices to £308,151.
Miles Shipside, director of Rightmove, says: “Properties at the lower end of the market were the most common target for the investor community, and the immediate aftermath of the tax deadline saw new seller asking prices drop in this sector for just one month. The 1.4% fall reported in April’s index appears to have been a very short-lived knee-jerk… it remains to be seen if these prices can be achieved and there may be some over pricing in the market; it is also a reflection of better quality property coming to market in this sector which is now targeting owner-occupiers rather than landlords.”
Jeremy Duncombe, director, at Legal & General Mortgage Club, adds: “The relentless increase [of house prices] raises the issue of affordability in this country, particularly in the south of the UK.
“In order to tackle this growing problem more homes need to be built in areas of high demand… the industry needs to work together, to increase supply and ensure that much of the population is able to afford the home they want.”
With the report adding that new-to-the-market housing supply is down 1.5% year-on-year, the jury is out on if this increase in asking prices is a spike or a sign of things to come for a while longer yet.