THE PROPERTY EXPERT

Average asking price for firsttime buyer home jumps 6.2%

RIGHTMOVE recently published data showing a rather steep increase in the asking price for first-time buyers. On average, a month-on- month increase of over £11k was achieved, not including London figures.

It is thought that this is a consequence of the government’s stamp duty surcharge, with investors rushing to save before the 3% tax increase came into effect, exacerbating a part of the market already suffering a shortage of homes.

This may be a short-term trend, but it looks as though the government policy has had the immediate effect of causing buy-to-let landlords to focus attention on cheaper properties, where the stamp duty will have less of an impact, and the yield to value ratio is more favourable.

The unfortunate consequence is that many potential first time buyers are now priced further out of the market, completely at odds with the government’s stated objective.

These price increases were confined to properties with less than two bedrooms, with particular focus on one bedroom flats; two bedroom flats, already at a premium, are appearing to peak in price.

Across all property types the price increase was 0.4%, which suggests that as the gap between two bedroom homes and larger homes becomes smaller, we will see the continued trend of first time buyers jumping the ‘first rung’ of the property ladder, opting for three or four bedroom homes.

What is even more alarming was the 18% monthly increase on two bedroom or fewer homes in London. With such a shortage of homes causing this upward price pressure, more and more first time buyers will be attracted outside of London to the commuting areas where the market is comparatively more attractive in terms of affordability.

Having said all this, research directors at Rightmove point to early signs of first-time buyers starting to grow, possibly an indication that the government’s help to buy schemes are having some impact.

The lifetime ISA should also help first time buyers, but this is likely to take effect in the medium term.