First-time buyer property prices shot up £11k in the last month
Average property prices increased by a modest 0.4% over the last month, according to Rightmove, but the property portal warned that this small rise masked a much bigger problem for first-time buyers.
Average typical first-time buyer properties rocketed 6.2%, equating to an £11k jump in May alone, making it harder for those wanting to buy their first home to get a footlold on the property ladder.
It was speculated that the investor activity drop-off after the April 1st Stamp Duty deadline would act as a brake on prices at the lower end of the market. However, intense investor activity – with March transaction numbers up a massive 80% on last year – has exacerbated the property drought in this sector and is now causing upwards price pressure, said Rightmove.
Miles Shipside, Rightmove director and housing market analyst said: “If you were expecting a long period of price doldrums at the lower end of the market following the mass exit of the buy-to-let brigade, this month’s 6.2% price rise will come as a big surprise. 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, with an average price surge of £11,298 this month for properties coming to market with two bedrooms or fewer. 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.”
In the period between the November announcement of a Stamp Duty rise and its implementation at the end of March, the price of property coming to market in this first-time buyer/investor sector increased by 3.0%. In just four weeks it has now risen by 6.2%, the highest monthly rise recorded for this sector since February 2012.
Demand for typical entry-level property remains high, with searches on Rightmove specifying two bedrooms or fewer being up by 47% this April compared to April 2015 in spite of waning investor interest. In contrast, fresh supply for this sector is down by 1.5% in the last four weeks compared to the same period a year ago.