FTB asking prices rose three times faster during pandemic: Rightmove

Asking prices for first-time buyers and equivalent asking rents have increased three times faster in the past two years, compared to the same period before the pandemic, according to Rightmove.

New data from the real estate website says average asking prices ‘for FTB type properties’ – two bedrooms or less – have risen 13%, or £17,557, since July 2020, from 4%, or £8,069, between July 2018 and July 2020.

He adds: “For future FTBs looking to save while renting, they face the challenge of record rents rising at the fastest rate ever. Average monthly rents are 17%, or £128, higher nationally than they were two years ago. National average incomes increased by 14% over the same period.

The report comes as Office of National Statistics said last week that inflation hit 9.4% in June, setting a new 40-year high, driven by rising fuel and food prices. The Bank of England has raised interest rates five times since December to 1.25%.

The Right move study says ‘FTB-like properties’ reached a UK record of £224,943, with the average 10% deposit now standing at £22,493.

He adds: “That’s £2,560 more 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 has only increased from £807.

For new FTBs who were 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 the rise real estate prices and rising interest rates.

Monthly mortgage payments for a new FTB based on the current average rate are £976, £173 more than two years ago, the report says. Average monthly mortgage payments have only increased by £41 over the previous two years.

In an earlier report from May, the real estate website surveyed the attitudes of those considering buying their first home, who said rising house prices and soaring energy bills are the biggest challenges they face. He revealed that 43% of these potential buyers hope to be able to save enough to buy in the next three years, with two-thirds already starting to save each month for their deposit.

Rightmove data expert Tim Bannister says, “Our affordability analysis highlights the many challenges that FTBs are trying to overcome at the moment. For future FTBs trying to save a down payment, they are chasing a rapidly changing goal as average asking prices for FTB homes hit a new high and are rising faster than before the pandemic.

For those who cannot live with parents or family members while saving, they must also manage paying record rents in and out of London.

Those who were able to save a deposit now face rising interest rates given what they can afford to repay each month. Given the current economic uncertainty, ETFs can seek some financial security by locking in a longer fixed rate mortgage term now, before interest rates rise.

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