That’s an annual increase of 8.2 per cent, and the quarterly increase of 3.4 per cent takes quarterly house price inflation to its highest levels since late 2006.
However, the level of annual increase for first-time buyers purchasing their first home actually outstrips that average figure, up at 9.1 per cent.
It’s a simplistic way to look at things but if you were a first-time buyer purchasing a home at £250,000 in November 2020, you would expect to pay £272,750 last month. That’s a lot of money to find – just in terms of five per cent deposit level requirements it’s the difference between £12,500 and £13,638.
However, you might actually argue that from April/May this year, even with the increase in prices, the job of purchasing a home has actually got a lot easier for first-timers.
Leaping LTVs
Back in November last year, the number of 95 per cent loan to value (LTV) mortgages was pretty much non-existent. The minimum deposit requirement would have effectively been 10 per cent – £25,000 – for that £250,000 property.
Now, aided by the catalyst of the Government Guarantee Scheme, the number of 95 per cent LTV products has increased significantly, meaning a £13,638 deposit can get you on the ladder, whereas last year a £12,500 one could not.
Progress then, of sorts. And, of course, first-timers are now the only purchasers who have access to a stamp duty ‘holiday’, plus the latest iteration of the Help to Buy scheme is only available to them, and there are other schemes such as Deposit Unlock which I’m certain will be in much demand, and is likely to be here for much longer than the Government Guarantee Scheme which is due to finish at the end of 2022.
This is, of course, not a uniform picture in terms of house prices. The average priced home in Wales, for example, passed £200,000 for the first time last month; annual inflation is close to 15 per cent there; in the North West it is 11.4 per cent and in Northern Ireland it is 10 per cent.
Lending appetite growth
It’s not anticipated that prices will continue in this vein during 2022 but it also seems highly unlikely that the market is going to be flooded with supply in order to cope with the strong demand that already exists. In essence, prices are unlikely to take a tumble anytime soon.
However, there is good news in terms of mortgage lenders’ growing appetite to support first-timers and, as mentioned, the fact we now have a fully-functioning and (hopefully) sustainable high LTV product space, is a huge improvement on where we were just 10 or so months ago.
The difficulties that first-timers have to overcome, principally the saving of a deposit, do remain but at least they are now able to see product opportunities at five per cent, whereas before there was none. Maintaining this part of the mortgage market must be a priority for all in 2022 and beyond.
