First Time Buyers Competing with Landlords for Small Homes

A new asking price record has been set, as first time buyers compete with buy-to-let landlords for smaller homes, according to the latest report from Rightmove.

The average asking price of a property coming onto the market is now £296,549, up 0.6% on last month and 5.6% over the year.

The property portal states that first time buyers and investors are going head-to-head over homes with up to two bedrooms.

First Time Buyers Competing with Landlords for Small Homes

It reports that asking prices for these properties are up 4.9% on a monthly basis and 9.6% higher than last year.

However, supply of smaller homes has fallen by 8% on 2014 levels.

Nationally, excluding inner London, the average asking price of a smaller home is now £184,676.

The average second-stepper property coming onto the market costs £247,004, indicating a huge financial leap for second time buyers.

The typical top-of-the-ladder home has an asking price of £530,457.

Although new asking price records have been set, the rate of growth has slowed, marking the lowest October increase since 2010.

Rightmove has found that a “vicious circle” has formed, with high tenant demand fuelling buy-to-let investment.

The portal also reveals that many letting agents are observing same-day rentals, with little or no properties available to let.

It describes rental demand as “extraordinary”¹, noting lack of supply from housing associations and local authorities.

Director of Rightmove, Miles Shipside, says: “Tenant demand is such that many letting agents are reporting viewings and tenancy applications on the same day as marketing properties.

“In some cases they’ve nothing left to rent until tenants move out or a new influx of investor landlords gives some short-lived respite to tenants-in-waiting.

“Both investor landlords and first time buyers looking to buy smaller homes are finding them in short supply. As they’re typically owned by potential first time sellers, the price gap and costs of moving to the second step on the housing ladder deter them from coming to market.

“Competition is most fierce in this sector, with first time buyers and buy-to-let investors going head-to-head for the same properties.”¹

The report follows data from Your Move and Reeds Rains, which shows that rents around the UK have reached an all-time high.

The average rent in London is now £1,301 per month, up 11.6% on last year.

Nationally, the average rent has risen by 6.3% from last year, hitting £816 a month.

¹ http://www.propertyindustryeye.com/first-time-buyers-asked-to-pay-the-price-as-they-go-head-to-head-with-investors/