First time buyers paying a record amount despite referendum wobbles

28th June 2016

First-time buyers are paying a record amount to purchase their first home, despite the wider market wobbling around the EU referendum, according to estate agents Your Move & Reeds Rains.

May saw first-time buyers pay an average of £173,282 to get onto the housing ladder, up 2.7% from £168,656 in April and 15.8% more than the average of £149,645 seen in May 2015. First-time buyer house prices have now shot up more than £23,000 in the last twelve months and current average prices paid are the highest on record.

Across the market as a whole, house prices dipped in May in anticipation of the EU referendum on 23rd June, with the latest Your Move House Price Index showing house prices in England & Wales slumped 0.4% month-on-month in May. But the bottom of the market has defied this trend fuelled by unwavering FTB demand.

Completed first-time buyer sales totalled 24,900 in May, just 0.8% lower than the 25,100 seen in April, even as first-time buyers were held back by a lack of homes on the market ahead of the EU referendum. The overarching trend remains strong, with FTB numbers 13.2% higher than the 22,000 seen in February and 5.1% higher than a year ago.

Adrian Gill, director of estate agents Your Move and Reeds Rains, said:May saw a crunch in the number of homeowners putting up a ‘for sale’ sign as many sellers held back to see the result of the EU referendum. But Brexit worries haven’t dented first-time buyers’ appetite to own their own home. Many still want to capitalise on the record low mortgage rates available at the moment which mean that monthly mortgage repayments are increasingly affordable.

“The Brexit result won’t change the fact that huge numbers of aspiring first-timers want to buy a first home, and lots won’t want to wait out the 2 years until the renegotiations over the EU have been completed. In the short-term, the wider market wobbles may benefit first-timers, giving them the leverage to negotiate harder and get a good deal on purchase price. Canny first-timers will use any Brexit-lull as a chance to snap up a good deal and get on the housing ladder.

“New builds still have a part to play in absorbing first-time buyer demand. But the biggest and most immediate improvement would come from stimulating more activity from the top to the tail of the housing market. Just as many first-timers can’t find the one bed flats or two bed houses they are typically looking to buy, some second steppers can’t find the three bed homes they may want to move into to suit their growing families. Even last-time buyers looking to downsize and free-up their larger family homes are often struggling to find suitable properties for sale. Housing chains are clogged up right the way through from first-time to last-time buyers. The government should support our sellers, making it cheaper to move house and adding much needed energy back into the market. Houses for sale are getting snapped up very quickly in this climate but many more sellers are needed.”

  Monthly Transactions Average Purchase Price Average LTV
May 2016 24,900 £173,282 84.0%
April 2016 25,100 £168,656 83.8%
1 month change -0.8% +2.7% +0.2 (from 83.8%)
3 month change +13.2% +2.8% +1.5 (from 82.5%)
1 year change +5.1% +15.8% +0.4 (from 83.6%)

First-Time Buyer Affordability

  Average deposit Deposit as proportion of income Average mortgage rate Mortgage repayment as proportion of income
May 2016 £27,669 69.8% 3.08% 21.1%
April 2016 £27,290 68.8% 3.10% 20.5%
1 month change +1.4% +1.0 -0.02 +0.6
3 month change -6.0% -4.8 -0.06 +0.7
1 year change +12.8% +6.1 -0.37 +1.7

Leave a Reply

Your email address will not be published. Required fields are marked *