Mortgages

First-time buyers paying up to £73k more since housing market reopening

Rozi Jones
|
14th April 2021
mortgage house first time buyer first-time ftb
"The nation’s first-time buyers are now facing a considerably tougher challenge than they were less than a year ago, with house prices climbing by more than £70,000 in some areas."

First-time buyers are paying up to £73,000 more to get onto the property ladder since the housing market reopened in May last year, according to research from BuildScan.

BuildScan analysed first-time buyer house prices from Land Registry house price records, looking at how they have changed between May 2020 and January 2021.

While the stamp duty holiday has helped boost buyer demand, the consequence has been a sharp uplift in house prices and this is no different for those taking their first step onto the ladder. In May of last year, the average first-time buyer in England was paying £207,068 for their first home, however, this cost has now climbed by £14,675 to £221,743 today; an increase of 7%.

Some regions have seen a far greater increase and in London, the average first-time buyer is now paying £22,631 more to buy their first home than they were back in May of last year.

The North West (£16,870), the East of England (£14,739) and the South East (£14,266) have also seen some of the largest jumps in the average first-time buyer house price since the market reopened for business.

When looking at the market in more detail, it becomes even more painful for first-time buyers in some areas of the market.

Islington has seen the largest increase in the sum paid by the average first-time buyer of all areas of England. In May last year, the average first-time buyer paid £594,884 to get on the ladder, however, this has since increased by a huge £72,803.

Haringey (£61,752) and Hammersmith and Fulham (£45,372) have also seen some of the largest increases.

In Rutland, the average first-time buyer is now paying £42,124 more for a home, the fourth largest increase in England. Oxford has also seen a reduction in affordability, with the average first-time buyer paying £40,440 more now when compared to May of last year.

Dacorum (£36,221), the Derbyshire Dales (£35,706), Redbridge (£35,053), Elmbridge (£34,769) and Ryedale (£34,110) also rank within the top 10.

Founder and managing director of BuildScan, Harry Yates, commented: “Current market conditions remain very favourable for buyers, largely due to the ongoing low cost of borrowing and, of course, the saving made via the stamp duty holiday.

"Unfortunately, the consequence of fuelling such demand is always going to be an uplift in property prices. As a result, the nation’s first-time buyers are now facing a considerably tougher challenge than they were less than a year ago, with house prices climbing by more than £70,000 in some areas.

"While they should still be able to secure a favourable rate of interest on their mortgage, the deposit required to do so will have increased, as will the time required to repay the sum borrowed. So while current Government initiatives can be credited for revitalising the market, it’s important to also recognise the detrimental impact they’ve had for those already struggling to make it onto the property ladder.”

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