THE MIDLANDS PROPERT Y GUIDE MONE YWATCH F INANCE
MONEYWATCH FINANCE
FIRST-TIME BUYERS NAVIGATE COST-OF-LIVING CRISIS
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For the past three years, lenders have worked hard to support this key part of the market — and FTBs are proving resilient
First-time buyers (FTBs) have rolled with the punches dealt by the cost-of-living crisis over the past three years and they continue to buy homes.
In the face of “substantial hikes in mortgage rates”, the number of FTBs has remained “resilient” compared to home movers and landlords.
The property agent reported in April last year that FTB numbers were 30% below their 2017-19 average. But by April 2024 they had bounced back to just 11% below that average, maintaining their typical share of around 29% of the whole of the homebuying market. By comparison, home mover and buy-to-let purchases were both 24% below their 2017–19 average levels April 2024.
To keep up this level of homeownership, FTBs have had to tack against significant headwinds.
Most parents believe they’ll have to assist their children in some way to get on the ladder.
The Bank of England (BoE) cut rates from a 16-year high in August, by 0.25 percentage points to 5%; its first cut in four years. But before that the central bank had lifted interest rates 14 times in a row, between December 2021 and August 2023, taking the base rate from 0.1% to 5.25%.
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The BoE acted to combat inflation, which had rocketed to a 40-year high of 11.1% in October 2022, sparked by supply chain backlogs leading to food and energy price rises in the aftermath of the pandemic, as well as war in Ukraine, and later unrest in the Middle East.
The annual rate of rising prices now stands at 2.2% after the central bank’s tightening.
However, the average house price lifted by 4.3% to £292,505 in the year to August, its highest in two years, according to the latest Halifax House Price Index.
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