Reports from a recent survey by estate agency Your Move and Reeds Rains show that first-time home buyers in the UK may have to break the bank in order to buy a house, even though the market has been shaky following results of the European Union referendum.
In May, first-time buyers paid a standard £173,282 in order to become homeowners, and the figure went up 2.7 per cent from £168,656 last April–15.8 per cent higher than the average £149,645 that was seen in May 2015. This means that in the past 12 months, first-time buyer house costs have surged upwards more than £23,000 and the available prices for sale now are the highest ever recorded.
Throughout the property market, the price of houses dropped in May because of the anticipated EU referendum on 23rd June. The recent Your Move House Price Index indicated that the price of houses in England and Wales fell by 0.4 per cent consistently in May. But the bottom of the market explained that this was caused by resolute FTB demand.
The total number of first-time buyer sales was recorded at 24,900 in May, dropping by 0.8 per cent from 25,100 in April, even though the first-time buyers were delayed by lack of available homes for sale ahead of the EU referendum. This common trend persists with FTB figures 13.2 per cent higher than 22,000 observed in February and 5.1 per cent more than last year.
Differences in Figures Across the Regions
The average price of the first-time buyer property is at a high of £150,000 across four UK regions; which includes the East of England (£161,088) and the South West (£165,068), while the South East is the highest at £229,828.
As expected, London is still the region with the most expensive prices for a first home. First-time buyers in the cosmopolitan city have to pay an average of £338,074 to become house owners, depositing about £84,138 with an average mortgage cost of £253,936. In spite of these record-high prices, 11,700 first-time buyers in London bought properties in between March and May 2016.
The North East and Northern Ireland provide the lowest price options for first-time buyers. The standard FTB house in the North East- and currently the cheapest regionally- costs £106,022 which is less than a third of the cost of an average priced home in London. These affordable costs enabled 3,300 first-timers to buy properties in the northeast between March and May 2016.
Optimism Among First-time Buyers
According to Adrian Gill who is a director at the estate agency Your Move and Reed Rains, a lot of homeowners decided to hold back on their property sales in anticipation of the outcome following the EU referendum. As a result, property sales slumped in May.
However, he believes that concerns over the Brexit effect haven’t discouraged first-time buyers’ intentions to purchase their own home. A lot of them will want to take advantage of the competitive mortgage rates currently available. This will mean lower costs of mortgage repayments.
Adrian Gill also believes that the most significant improvement will come from encouraging more activity from the top to the bottom of the property market, and the government should support property sellers to make the housing market more affordable for first-time buyers.