Just a third of homes listed for sale are classed as affordable
Research by mortgage adviser, Alexander Hall has revealed that not only are first-time buyers facing a tough task when climbing the ladder due to higher mortgage rates, but they face tough competition as just a third of properties listed in the current market are affordable.
The research shows that the average first-time buyer house price across Great Britain currently sits at £244,519, meaning that the average first-time buyer requires a loan of £207,841 once they’ve placed a 15% deposit of £36,678.
With the average rate for a first-time buyer mortgage now 4.57%, up from 4.38% a year ago, the monthly cost of repaying a mortgage now sits at £1,164 per month - a 7.3% annual jump equivalent to £79 per month.
However, further research from Alexander Hall shows that it’s not just the cost of saving a deposit and securing a mortgage that could prove problematic for the nation’s first-time buyers, as they face stiff competition in securing a property in the first place.
Across Britain, there are some 436,839 properties currently listed for sale, but only around a third (34%) are listed with an asking price at, or below, the average price paid by a first-time buyer.
Whilst London is home to by far the highest average price paid by first-time buyers at £444,548, it’s the West Midlands that is home to the lowest level of potential stock available to them.
Across the West Midlands, just 27% of homes currently listed for sale have an asking price at or below the average price paid by a first-time buyer (£214,955).
In fact, Yorkshire and the Humber (31%), Scotland (31%), Wales (32%) and the South West (32%) also rank ahead of the capital when it comes to the lowest percentage of for-sale stock listed within the price range of the average first-time buyer.
The North East boasts the largest percentage of for-sale stock within reach of the average first-time buyer, with 37% of current listings sitting at or below the average FTB house price of £146,393 in the region.
“Getting that first foot on the property ladder is no easy feat and today’s first-time buyers are facing a considerably tougher task than their predecessors, with the average price paid by a first-time buyer having increased by 52% over the last decade alone," commented Stephanie Daley, Director of Partnerships at Alexander Hall, "Not only does this mean they require a larger deposit in order to secure a mortgage, but their monthly mortgage repayments are higher as a result, with this cost being driven up even further as a result of higher mortgage rates versus a year ago.
She adds, "Of course, the initial challenge is finding a property within the boundaries of affordability and, as our research shows, only around a third of homes currently on the market are realistically affordable for the average first-time buyer.
"The good news is that we’ve already seen the Bank of England reduce interest rates already this year and, with more cuts expected to come, first-time buyers should start to benefit from easing mortgage rates.
Stephanie concluded, "Our advice is, where possible, save that little bit extra when forming a mortgage deposit, as this will increase your property purchasing potential. It’s also well worth seeking the help of a top mortgage advisor, as they will ensure that you get the very best mortgage deal available to you, which can also help strengthen your position in the market and increase the potential number of homes available to you.”