This month, the average property price entering the market has increased by only 0.2% (equating to £890), a lower growth compared to the typical 1.2% seen during this time of year. The cautious pricing approach is suggested to attract Spring buyers. Despite economic challenges, first-time-buyer properties reached a new record price of £224,963 this month. With soaring rent prices, purchasing a home remains an attractive option for first-time buyers who can overcome mortgage and deposit barriers.
The average first-time-buyer mortgage rate for a 5-year fixed, with a 15% deposit has decreased to 4.46%, with the lowest rate for this mortgage type currently at 4.19%. The number of sales agreed has recovered to pre-pandemic levels seen in March 2019 and has also surpassed last September's numbers, which experienced a 21% drop after the mini-Budget aftershocks.
The first-time-buyer sector (properties with two bedrooms or fewer) leads this recovery, with agreed sales now 4% higher than in March 2019. In contrast, the second-stepper sector lags 4% behind, and the top-of-the-ladder sector is 3% behind. Sales agreed are still 18% lower than the exceptional market of last year as we move towards more normal sales activity levels.
New seller asking prices are reaching £366,247. This is significantly lower than the average increase for this time of year. This cautious pricing approach is a response to economic challenges and the shift in the housing market towards a slower pace and more regular activity levels, similar to those seen pre-pandemic.
The market is moving away from the frantic, multiple-bid market mindset of last couple of years. This stability may encourage more sellers who had been hesitant to enter the market due to its fast pace.
As a result, buyers may find a broader selection of properties to choose from, compared to the limited inventory of recent years.
First-time-buyer properties have reached a new record price despite the economic challenges that have made mortgages more expensive and saving for a deposit more difficult. However, strong buyer demand in this sector, which is now 11% higher than in the same period in 2019, demonstrates the continued desire for first-time buyers to own a home. This demand is understandable, considering the competitive rental market and record-high rents.
Mortgage rates have been dropping in recent weeks, with lender competition now strongest in the traditional first-time buyer loan-to-value ranges of 85% and 90%. It remains to be seen whether this trend will be affected by the latest inflation figures. With more competitive rates available for first-time buyers, more people may be encouraged to take the leap now.
In conclusion, the average mortgage rate for a 5-year fixed, with a 15% deposit is currently 4.46%, with the lowest rate for this mortgage type standing at 4.19%. This rate has decreased from an average of 4.65% a month ago but is still higher than the average rate of 2.64% at this time last year.
If you are looking to get onto the property ladder, speak with our team who will help you find your ideal first home and guide you through the entire process.