First-buyers being squeezed out by rising house prices, Rightmove says

Ballooning house prices in the UK look set to squeeze out first time buyers as they struggle to secure large enough mortgages, Rightmove warned on Monday.

House prices in September rose 0.7% compared to a month ago to an average of £306,499 after falling 1.2% in August in the aftermath of the Brexit vote. On an annualised basis, house prices jumped 4% in September following a 4.1% year-on-year drop.

Rightmove director Miles Shipside said first time buyers are having a hard time getting on the property ladder as house prices continue to rocket.

"The rising tide of prices is marooning more and more first time buyers, out-stripping their ability to meet stricter lending criteria and afford the required deposits and monthly repayments," Shipside said.

"Increasing numbers are being cut off from home-ownership altogether and while schemes are in place to help, the additional demand they create is not matched by available and affordable supply."

The Bank of England has cut interest rates to 0.25% but the central bank has also tightened restrictions on lending. Most new mortgages are offered at under 4.5 times the borrower’s income.

Shipside said higher prices also mean higher deposits and repayments, negating the benefits of lower borrowing costs.

He added: “Some of those trying to get onto the property ladder may have wistfully listened to speculation of lower prices in a post-Brexit Britain.

“While the referendum result has created additional downwards price pressure in some upper segments of the market that were already slowing, those who do not own a home and arguably have the greatest housing need are now finding it harder to achieve their goal in the post-Brexit-vote aftermath. In their favoured target sector with two-bedrooms or fewer average asking prices have jumped by over £6,000 in the last month as we enter the typically active Autumn market.”