The average price tag on a first-time buyer home hit a record high of £224,963 across Great Britain in April after edging up by 0.2 per cent month-on-month.
Property portal Rightmove defines typical first-time buyer homes as flats and houses with a maximum of two bedrooms.
Agreed sales in the first-time buyer sector in March were running at around 4 per cent higher than those seen in March 2019, according to the Rightmove data, while sales of homes higher up the housing chain lagged behind levels seen four years ago.
Rising rents may be encouraging some first-time buyers to make the jump onto the property ladder, despite higher mortgage rates generally having pushed up borrowing costs. There have been signs of some lenders cutting mortgage rates in recent months.
Tim Bannister, Rightmove’s director of property science, said: “The first-time-buyer sector typically accounts for over a third of all sales, which are often the start of chains, so these positive sales agreed figures are good for the health of the whole market.
“The current multi-speed market is highlighted by sales of larger homes continuing to lag behind, with some sellers in the upper sectors likely needing to show a greater degree of pricing restraint to attract buyers in this much more price-sensitive market.
“More competition amongst lenders in the smaller deposit, higher loan-to-value ranges is positive news for those would-be first-time buyers who have saved up their deposit and can still afford to move.
“However, it remains a challenging environment to get onto the ladder, with new record average asking prices and higher borrowing costs to budget for than a year ago.”
Looking at all property types across Britain, the average price of a home coming to market increased by 0.2 per cent or £890 in April, which was lower than the typical uplift of 1.2 per cent seen at this time of year.
The average price tag on a home in Britain was £366,247 in April, while the average asking price of a home in London dropped 0.5 per in a month to £677,230.
Buyers may have struggled to find a home that suited their needs in the stock-constrained market of recent years and will now find more choice available
Rightmove said the “unseasonal pricing restraint” is a sign that many new sellers are taking note of the economic headwinds and the transitioning of the housing market to a slower pace and more normal activity levels, last seen in the pre-pandemic market of 2019.
Tom Bill, head of UK residential research at Knight Frank said: “The steep drop in property sales that followed the shock of the mini-Budget has bottomed out.
“The mortgage market has stabilised and buyers increasingly accept they are in a new lending landscape after 14 years of ultra-low rates.
“The further we get from the mini-Budget, the stronger the market is performing. That said, homeowners will experience more financial pain as they roll off historical fixed-rate deals and UK prices should fall by a few percent this year.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Buyers who are either equity-rich or who have a ready-to-go mortgage are negotiating hard in order to get what they want. First-time buyers in particular are seizing the opportunity in increasing numbers to flex their muscles and get the best deals they can, in order to escape inexorably rising rents.”
“Activity is slowly improving as we get more into the spring market but buyer caution about the cost of living means they are taking their time before taking the plunge.”
Tomer Aboody, director of property lender MT Finance, said: “There may be fewer buyers out there but sellers serious about selling are pricing realistically and subsequently are able to find a buyer.
“Regional areas are performing well due to lower pricing and better affordability than more urban areas, as many buyers still have less need to be centrally based as they continue to work from home either full time, or at least some of the time.”
