Runaway house prices mean first-time buyers have to make quite a bit of money or save for a very long time, says interactive investor.
- Annual UK house price growth increased to 12.6% in February, from 11.2% in January
- Prices up 1.7% month-on-month
- Average house price exceeds £260,000 for first time
- Price of typical home 20% higher than February 2020
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “There is no stopping house price growth in the UK it seems, fuelled by the ongoing demand-supply mismatch for property.
“For first-time buyers, runaway house prices mean they’d have to make quite a bit of money or save for a very long time to be able to afford a home. The ongoing cost of living crisis exacerbates matters, with many struggling to absorb rising prices and build up wealth to buy a home.
“Their plight is compounded by the stark lack of supply of homes, especially for family homes, which has prevented existing homeowners from moving up the property ladder and freeing up existing inventory for the new wave of first-time buyers.
“Low deposit mortgages offer little respite because many wannabe homeowners simply wouldn’t be able to afford the monthly repayment burden on the mortgage they would need, leaving them in a position of having to build a bigger deposit to buy. However, the harsh reality is rising rents, ballooning inflation which continues to outstrip wage growth, and a lack of affordable housing that has priced many out of the market.
“Those who can afford to buy a property might question whether it is a sensible time to do so with house prices at record highs. Many will be hoping house prices will dip, but no one can say for sure when this will happen. For those planning to live in the property for a long period of time, it shouldn’t matter too much if house prices dip in the short term. The key is making sure you can afford the monthly mortgage repayments.”
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