By Despite a cooling housing market that has seen the average UK house price fall every month since November 2022, the average first-time buyer (FTB) in Britain has seen the cost of a home increase by £25 per day since interest rates first started to climb in December 2021, according to new research.
Researchers analysed house price data since the first Bank of England rate increase in December 2021, to show how the task of getting that first foot on the property ladder has become all the harder, despite cooling market conditions.
The research shows that the high rates of house price growth seen during the pandemic have been dampened due to increasing interest rates.
In fact, since December 2021, the average FTB house price has increased by 5.8 %.
However, this means that the high financial hurdle of getting that first foot on the ladder has increased by a further £13,018, meaning those that have chosen to sit tight and wait to buy have seen the average cost of a home increase by £25 per day.
This also means that the average FTB deposit requirement has increased by £1,953 to £35,502, while at the same time, the average mortgage rate has risen from an estimated 1.72% to 4.22%,
As a result, those looking to purchase today will be paying £306 more per month when repaying a mortgage, with the average monthly repayment now standing at £1,086 per month.
What’s more, those stuck within the rental market have paid an average of £25 per day in rent, highlighting how the high cost of renting prevents many from accumulating the necessary savings pot to make the jump to homeownership.
Regionally, it’s those in the South East who have seen the largest increase in the cost of a first home since interest rates started to climb.
The average FTB house price in the region has climbed by £40 per day since December 2021, with the South West also seeing an increase of £34 per day.
However, at local authority level, it’s the London Borough of Tower Hamlets that has seen the biggest increase, with the average FTB seeing the cost of a first home increase by a huge £151 per day since interest rates started to climb.
This is followed by Hackney with a hefty £109 per day increase.
But these huge increases aren’t restricted to the London market alone, with Sevenoaks seeing the next largest increase at £96 per day, followed by Cambridge (£94 per day), Melton (£88 per day), Wokingham (£88 per day), Canterbury (£87 per day), Hounslow (£80 per day), and Greenwich (£80 per day).
Nigel Purves, Co-founder & CEO of Wayhome, the Gradual Homeownership provider responsible for the research, comments:
“A generation of first-time buyers have become accustomed to a sub one percent base rate as the norm and have enjoyed a prolonged period of mortgage affordability as a result.
So it’s understandable that at the first sign of market uncertainty and with interest rates rising, many may have chosen to sit tight and postpone their decision to buy in anticipation of higher borrowing costs and fears of a market crash.
However, we simply haven’t seen house prices plummet as was so widely anticipated and while the rate of house price growth has certainly slowed, the average value of a first home is now some £13,000 more than it was when the first interest rate hike was implemented.
First-time buyers have never had it so hard, with the average price of a home increasing by £25 per day, not to mention the fact the Bank of England base rate has climbed to its highest since October 2008.
This means the average first-time buyer has seen the cost of a mortgage deposit increase by almost £2,000 since interest rates started to rise, while the monthly cost of repaying a mortgage for those who do make it onto the ladder has climbed by over £300 per month.
For many people this just isn’t feasible and they find themselves locked out of homeownership and stuck in rentals where prices are also rising.
This demonstrates the double pronged impact that many first-time buyers are struggling to overcome when it comes to getting that first foot on the property ladder and highlights that you are far better off taking the leap when you can, rather than enduring the cost of hesitation by sitting tight while house prices climb ever higher.”
| Table shows the average first-time buyer house price and the daily increase since interest rates first started to increase in December 2021, as well as the average cost of renting per day | ||||||
| Location | Ave FTB price – Dec 2021 | Ave FTB price – latest Mar 2023 | FTB house price change £ | FTB house price cost or saving per day waiting until now | Ave rent per day Dec 2021 to now | |
| South East | £290,113 | £310,675 | £20,562 | £39.77 | £35 | |
| South West | £247,288 | £265,064 | £17,777 | £34.38 | £30 | |
| East of England | £272,812 | £289,043 | £16,232 | £31.40 | £31 | |
| East Midlands | £190,955 | £205,895 | £14,940 | £28.90 | £23 | |
| London | £438,896 | £451,730 | £12,834 | £24.82 | £54 | |
| North West | £165,773 | £177,631 | £11,858 | £22.94 | £23 | |
| West Midlands Region | £191,797 | £203,136 | £11,339 | £21.93 | £24 | |
| Wales | £173,539 | £183,813 | £10,274 | £19.87 | £18 | |
| Yorkshire and The Humber | £164,091 | £173,586 | £9,495 | £18.36 | £22 | |
| North East | £125,411 | £133,567 | £8,156 | £15.77 | £19 | |
| Scotland | £142,167 | £147,309 | £5,143 | £9.95 | £26 | |
| England | £237,306 | £251,841 | £14,535 | £28.11 | £31 | |
| Great Britain | £223,664 | £236,682 | £13,018 | £25.18 | £25 | |
| Table shows the increase in the average first-time buyer house price, mortgage deposit, mortgage rate and monthly mortgage repayment | ||||||
| Data Point | Dec 2021 | May 2023 | Change (N) | Change (%) | ||
| Average First-time Buyer House Price | £223,664 | £236,682 | £13,018 | 5.8% | ||
| Average Mortgage Deposit @ 15% | £33,550 | £35,502 | £1,953 | 5.8% | ||
| Average First-time Mortgage Rate | 1.72% | 4.22% | 2.5 | 2.50% | ||
| Mortgage Loan Required | £190,114 | £201,179 | £11,065 | 5.8% | ||
| Average Monthly Mortgage Repayment | £780 | £1,086 | £306 | 39.3% | ||
| Table shows the increase in the average first-time buyer house price, mortgage deposit, mortgage rate and monthly mortgage repayment | ||||
| Data Point | Dec 2021 | May 2023 | Change (N) | Change (%) |
| Average First-time Buyer House Price | £223,664 | £236,682 | £13,018 | 5.8% |
| Average Mortgage Deposit @ 15% | £33,550 | £35,502 | £1,953 | 5.8% |
| Average First-time Mortgage Rate | 1.72% | 4.22% | 2.5 | 2.50% |
| Mortgage Loan Required | £190,114 | £201,179 | £11,065 | 5.8% |
| Average Monthly Mortgage Repayment | £780 | £1,086 | £306 | 39.3% |
| Table shows the areas where the average first-time buyer house price has increased the most since interest rates first started to increase in December 2021 | |||||
| Location | Ave FTB price – Dec 2021 | Ave FTB price – latest Mar 2023 | FTB house price change £ | FTB house price cost or saving per day waiting until now | Ave rent per day Dec 2021 to now |
| City of London | £820,753 | £918,011 | £97,258 | £188.12 | £62 |
| Tower Hamlets | £418,438 | £496,699 | £78,261 | £151.37 | £56 |
| Hackney | £549,320 | £605,670 | £56,350 | £108.99 | £60 |
| Sevenoaks | £375,938 | £425,581 | £49,643 | £96.02 | £53 |
| Cambridge | £391,013 | £439,520 | £48,507 | £93.82 | £42 |
| Melton | £216,116 | £261,724 | £45,607 | £88.22 | £25 |
| Wokingham | £359,923 | £405,381 | £45,458 | £87.93 | £39 |
| Canterbury | £271,435 | £316,666 | £45,231 | £87.49 | £30 |
| Hounslow | £375,070 | £416,494 | £41,424 | £80.12 | £47 |
| Greenwich | £359,253 | £400,516 | £41,263 | £79.81 | £49 |
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Average rental values sourced from:
- England – Office for National Statistics
- Scotland – Gov.scot
- Wales – Gov.wales
House price cost increase per day and rental cost per day based on an approximate 517 days since the first interest rate increase (16th December 2021 to 16th May 2023)
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