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The price of a home for a first-time buyer has reached a record £224,963 this month, despite more muted conditions elsewhere in the housing market, according to Rightmove.
The property portal found the most buoyant area of the market was in properties typically favoured by first-time buyers, with sales volumes 4 per cent above those recorded in March 2019, before the boom driven by the Covid pandemic.
Volumes for homes a second rung up the property ladder remained 4 per cent behind 2019 levels, while sales of top-of-the-ladder homes trailed by 3 per cent.
Overall, new sellers’ average asking prices have increased by 0.2 per cent, or £890, in April to £366,247, a slower pace than the average 1.2 per cent rise that is typical for this time of year, Rightmove’s house price index shows.
Tim Bannister, the company’s head of data, said the figures portrayed a “multi-speed market” and that the hectic activity that had fuelled sales during the pandemic had faded. “Agents are reporting that many sellers have transitioned out of the frenzied, multi-bid market mindset of recent years and understand the new need to tempt spring buyers with a competitive price,” he said.
Demand for first-time properties, which typically have one or two bedrooms, was 11 per cent higher than it had been four years ago, according to Rightmove. It has risen despite the recent jump in interest rates, which has made mortgages more expensive.
Rightmove said demand among first-time buyers was being driven by conditions in the rental sector, “with soaring rents reaching new records and making buying compelling for those who can raise the deposit and obtain a mortgage”.
Covid lockdowns and the government’s stamp duty holiday during the coronavirus outbreak caused a boom in property prices that has faltered in recent months amid fears about the fallout from the high cost of living.
People are being squeezed by soaring inflation and the rise in interest rates as the Bank of England tries to tame price rises. These are stretching the affordability of mortgages and are weighing on the housing market.
Figures from Nationwide this month showed that prices had fallen by 3.1 per cent year-on-year in March in the biggest annual decline since July 2009.
Rightmove, which dominates the online property search market in Britain, makes money by charging estate agents to advertise on its site. Its monthly house price index tracks asking prices for first-time buyer homes, second-stepper properties, of three to four bedrooms, and houses and flats at the top end of the market.
