Rental demand to rise as first time buyers frustrated...

The latest Rightmove asking price market report suggests that the biggest victim of the current market mayhem is the first time buyer.

FTBs are hit by rising interest rates, widespread economic uncertainty and rising rents if they don’t buy, says the portal.

It reports that the average price of property coming to market rises by 0.9 per cent in the past month to a new record of £371,158, as shortages of property for sale continue to underpin prices.

The fact that prices are still rising suggests it will take time for any impact from interest rates and government policies to filter through to house prices.

There is also little sign of downwards price pressure on existing properties for sale, with the number of reductions up only two per cent on last month to 23 per cent - much lower than the pre-pandemic five-year average of 32 per cent.

Rightmove insists that it is very likely that asking prices will drop in November and December as they normally do, and it will be important to distinguish these seasonal price changes from market changes caused by other factors.

Tim Bannister, Rightmove’s Director of Property Science, says: “The vast majority of buyers who had already agreed their purchase are still going ahead.

“Some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises, and now face a difficult situation with rents also rising, and a shortage of available homes to rent.

“Buyer demand was already starting to soften and higher interest rates were anticipated, but they’ve been brought forward sharply due to market uncertainties. Agents report that many of those who managed to secure a mortgage offer at a lower rate before lenders quickly increased them are now rushing through their agreed deal to avoid their offer expiring and facing a higher rate when they come to reapply.

“It’s understandable that some new movers who have the option to wait, may want a clearer view than they’re getting right now before they proceed with a major purchase such as a home. With uncertainty over where mortgage interest rates will go, those who can still afford to proceed may decide that waiting too long could come at an even higher cost than taking action to move now, especially if the level of demand continues to outstrip supply and supports prices.”