"Another hammer blow to the aspirations of prospective first time buyers"
- Ben Bailey, Chief Customer Officer of Even
The South West and Wales are jointly the best performing regions, with annual house price growth of 10.6%, while London saw the lowest growth at 4.1%.
Strong demand and healthy volumes of new sales agreed in the first half of the year are supporting the growth, although the index shows that demand is weakening, underperforming last year as economic uncertainty increases. Buyer interest this summer - when demand tends to dip - is weaker than last year but still above the 2017-2022 average, and Zoopla reports that it expects demand to remain lower than last year as we go into autumn as affordability and the cost of living crisis bites potential buyers.
Currently, first-time buyer demand remains strong, with Zoopla's report noting that FTBs made up an increased share of all sales in H1 2022 - up to 35% compared to 32% in 2021. This appears to be driven by greater flexibility on where people can work and rising rental costs, with buyers looking further afield for better value for money. However, it notes that FTB behaviours and buying patterns are expected to shift further in H2 in response to higher costs and the increasing possibility of FTBs being priced out of the market.
Increases in the base rate have meant first-time buyer mortgage rates are now significantly higher - and that in order to fully offset this increase in mortgage rates FTBs would need to almost double the size of the average deposit.
Richard Davies, MD of Chestertons, says:
“We have seen a clear uplift in the number of viewings and the number of buyers registering with our branches in July. This increase in market activity suggests that, despite economic challenges and the changes to mortgage rules, buyer appetite remains on an upwards trend.”
“One driving factor behind house hunters wanting to move sooner rather than later are interest rates. With the Bank of England putting up rates more than once this year, many buyers have established a stronger sense of urgency. Another reason that drives buyer enquiries is that the market is seeing a post-pandemic reshuffle. After many house hunters put their search on hold or changed priorities over the past two years, we have since been registering enquiries from families wanting to finally make their move a reality as well as international students, international buyers and office workers who require a pied-à-terre closer to work again.”
Ben Bailey, Chief Customer Officer of Even, a specialist lender for first-time buyers, comments on Zoopla’s House Price Index:
“Rising house prices come as another hammer blow to the aspirations of prospective first time buyers. Those who now have to navigate the escalating cost of living and rocketing rents, and can’t fall back on the Bank of Mum and Dad, may be forgiven for thinking they’ve missed the homeownership boat.
“And with the Government’s Help to Buy scheme now also just months away from its end, the options for Generation Rent are becoming more limited. But we are seeing innovation in the market to bridge the absurd affordability gap in lieu of Government support. For those seeking to get a first foot on the ladder, it’s now about considering what alternatives are available to them - something a good mortgage broker will be able to assist with.”
