Rightmove’s data analysis reveals how much they have risen.
Asking prices and asking rents for first-time buyer type properties – those with two bedrooms at most – have risen three times faster compared with pre-pandemic years, new analysis from property listing platform Rightmove has revealed.
First-time buyer average asking prices are up 13%, or an equivalent of £17,557, since July 2020, compared with the 4%, or £8,069, rise between July 2018 and July 2020.
Meanwhile, Rightmove said prospective first-time buyers who are renting now face the challenge of record rents rising at the fastest rate ever recorded. Average monthly rental payments are 17%, or £128, higher than they were two years ago.
First-time buyer type properties have hit a new record average asking price of £224,943 across Great Britain. Therefore, an average 10% deposit 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, which is £173 more than two years ago. Average monthly mortgage payments rose just £41 in the previous two years.
In a recent Rightmove survey to identify current home-mover attitudes, those planning to buy their first home said that rising house prices and soaring energy bills were the biggest challenges they are currently facing. Over four in 10, or 43%, hope to be able to save enough 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.R
“Our affordability analysis highlights the many challenges first-time buyers are trying to navigate right now,” Tim Bannister, data expert at Rightmove, commented. “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.”
Bannister said that 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.
Private rents in UK reach record highs, with 20% rises in Manchester
Prices adding to cost of living crisis blamed on demand exceeding supply and rising interest rates
Average private rents in Britain have hit record highs, jumping by more than 20% in some areas such as Manchester, new data shows.
The average advertised rent outside London is 11.8% higher than a year ago, while in the capital it is up by 15.8%, according to the property website Rightmove.
The rise in housing costs is piling more pressure on households already feeling the strain of the cost of living crisis, and has been largely blamed on demand for rental properties greatly outstripping supply, leading to intense competition among tenants for what is available. Rising interest rates are also feeding through to tenants, with many landlords on tracker rates.
During the period from 1 April to 30 June, the average advertised asking rent outside London hit another new record of £1,126 a calendar month, Rightmove said. This figure has jumped by 19% – or £177 – in the two years since the pandemic started.
In London there was also a new record average advertised rent of £2,257, and the website said the 15.8% annual rate of growth was “the highest ever annual rate of any region”.
However, some locations have seen even bigger hikes. Rightmove’s table of rental price hotspots was topped by Manchester, where the average asking rent is up 23.4% in a year – from £913 in the second quarter of 2021 to £1,127 in the same period this year.
In second place was Chatham in Kent, where the equivalent increase was 21.4%, while in third place was Liverpool, which saw a 19.4% rise.
Three seaside towns – Weymouth in Dorset, Torquay in Devon and Margate in Kent – saw above-average annual increases of 19.1%, 18% and 16.9% respectively.
The figures provide the latest evidence of how the London’s rental market is experiencing a dramatic bounceback. A few months into the pandemic it was being reported that private rents in some parts of London had tumbled by up to 20%, with landlords forced to slash what they charged as tenants quit the capital, international student numbers plummeted and companies put relocation plans on hold.
But the return to the office, more overseas students looking for a place to live and companies moving or expanding have all fired up the market.
Richard Davies, managing director of estate agent Chestertons, said: “Those who secured a property at a discounted rental rate during the pandemic are keen to hold on to this deal as long as possible, particularly in the face of rising living costs.”
He added that the various factors at play had “created an extremely competitive market for tenants, where many offer landlords over asking price in order to secure a property”.
Rightmove said the stock of available rental properties was down 26% compared with last year’s levels, while demand was up 6%.
It added that average monthly rental payments were now 40% higher than they were 10 years ago, while typical mortgage payments for the same properties were up 13%.
An estimated 11 million people rent privately in England alone, and the sector has doubled in size during the past 20 years.