First Time Homes Cost £222,000 Thanks to Pandemic Price Climb

Emergency Covid measures added approximately 7% to first-time buyer bills, meaning buyers now have to find an extra £14,675 on average to get on the housing ladder. This is thanks to emergency policies that have helped fuel a property market that defies common sense.

Tax relief, record low interest and the government backing of 95% mortgages, in response to the economic risks the pandemic posed, pushed starter home prices up by 7% between May last year and January this year, according to the Land Registry.

At the height of the original lockdown, when the property market was essentially shut, the average first-time buyer could expect to pay £207,068. However, by the third lockdown in January, costs had climbed, and estate agents were selling first-time buyers £221,743 houses.

In London this increase was even higher, estate agents have reported selling first-time homes for an average of £230,000 in January.

Housing Market is Still Favourable

It may not seem like it, but the current market conditions are still very favourable for buyers. This is largely due to the ongoing low cost of borrowing, and due to the possible savings, the stamp duty holiday offers.

Unfortunately, the consequence of these offers is an increase in demand, and in turn, an increase in property prices. As a result, estate agents are working with first-time buyers who are facing a drastically tougher challenge than they were a year ago, with house prices climbing by more than £70,000 in some areas.

Although first-time buyers will be able to secure a favourable rate of interest on their mortgage, the deposit to do so has increased, and so the time to pay it back will also increase. The current government initiatives are bittersweet, they have revitalised the market to some extent, but they have also had a detrimental impact on those who were already struggling to get on the property ladder.

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