First time buyers have ceased to chase the housing market and pay proportionally more than home movers, as Brexit uncertainty and affordability concerns take hold.
Analysis by home finance provider Gatehouse Bank, has found the number of areas where first time buyers were willing to pay more to secure a foot on the property ladder has plummeted 98.8 per cent year on year, signalling a strengthening buyers market.
Doncaster in South Yorkshire was the only area where first time entrants to the property market were prepared to pay slightly more than home movers.
In 2017 the same study found 81 areas where first time buyers were chasing the market.
While affordability and Brexit uncertainty have played a significant part in the decline, according to the report, so too has the continued slowdown in house price growth across the country.
The latest Halifax House Price Index revealed that prices in the three months to January were a mere 0.8 per cent higher than in the same three months a year earlier, with the average house price being £223,691.
Charles Haresnape, CEO of Garehouse Bank, said: “First time buyers are an interesting group because they are a bellwether for affordability and the wider housing market.
“In the round, they are acutely sensitive to whether they are getting good value because it can have a significant impact on how quickly they are able to lower their finance costs and move up the ladder in the future.
“If first-time buyers are chasing the market to a larger degree than home owners, it is a bullish sign for prices.
“When they do a volte-face like this, people should take notice because first-time buyers are the new blood that keeps a market on its feet higher up the ladder.
“This trend could right itself over the next year, but only if wage growth continues to beat inflation and there is confidence in the economic outlook.”
Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said: “It is not surprising to see that first time buyers are looking to not pay over the odds.
“It is a strong buyer’s market currently with the Brexit uncertainty, putting the purchaser immediately in a strong position.
“We also have a climate where there is more stock availability for first time buyers thanks to the Help to Buy scheme, which is proving incredibly successful, and means first time buyers are more likely to be willing to walk away from a property knowing that other options will be available.”
Data from UK Finance published in January showed 35,000 first time buyer mortgages were completed in November 2018, a rise of 5.8 per cent on November 2017.
Meanwhile, a number of lenders have announced reduced rates on high loan-to-value mortgages to assist first time buyers in getting on the property ladder.
Analysis from Moneyfacts last week (February 8) showed the average two-year fixed rate at the maximum 95 per cent loan-to-value (LTV) tier has fallen by 0.54 percentage points.
Commenting on the data, Darren Cook, finance expert at Moneyfacts, said: “There clearly seems to be a concerted drive by mortgage providers to try and secure the business of potential FTBs, who are the lifeblood of the mortgage and property markets and it is encouraging to see rates decrease as a result of some healthy competition.”
Source: FT Adviser