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'Rush to Let' sees first-time-buyers edged out of market

Date online: 26/04/2016

The number of first-time buyers entering the market fell by 3.2% on the month and 1.9% on the year, due to the high level of competition with buy-to-let investors. First-time buyer house prices increased 12.7% annually, a faster rate of growth than the rest of the market, to reach £178,299, a record high for the seventh month in a row. These rising prices may also have contributed to firsttime buyers pulling out of the market.

This is supported by the fact that the average first time buyer deposit rose 5.3% on the year and the average mortgage rose 14.6% annually. The average age of first-time buyers has increased from 31.1 to 31.7 since February.

The average UK house price saw a significant annual increase in March, up by 12.1% annually and 0.5% on the month, to reach an average of
£232,030.

The supply of new homes coming onto the market has surged by 21.6% in the last month alone, but is up just 2.2% on the year. The monthly increase is a seasonal trend as vendors rush to enter the spring market. Meanwhile, the number of new buyers has dipped 5.1% on the month and 3.1% annually.

Meanwhile sales surged by 18.8% on the month and 16.7% on the year in March, as a result of a surge in the number of buy-to-let investors rushing through transactions before the 1st April stamp duty deadline.

Paul Smith, CEO of haart, comments: “First-time buyers saw intense competition from buy-to-let investors in March, and many were squeezed out of the market. There were 3% fewer first-time buyers registering with our branches, while buy-to-let sales soared by 19% as investors rushed to avoid the new stamp duty surcharge, which came in on 1st April.

First-time buyers are also under pressure to spend more, with the price of starter homes up almost 13% on last year, and average mortgages rising by an extra £18,318. Deposits were also up 5% on last year, making it even more difficult for people looking for their first home to get onto the ladder.

However it’s likely that first-time buyers have only been temporarily deterred by the level of competition. As we enter April we have already seen a significant reduction in the number of investors, with buy-to-let sales in the first two weeks of April down 55% on the same time in March. As investors take a step back from the market, the outlook for first-time buyers in the coming months looks brighter.”

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