First time buyers in London can expect to pay less to get on the property ladder as house prices fall and expectation for the year remain negative.
Data from the Office of National Statistics (ONS) shows first time buyers in London are paying -1.1% less over a month to August 2017 to buy their first home.
The price paid for a property has reduced £4,700 to £423,224 from July to August and the Royal Institution of Chartered Surveyors (RICS) expects prices in the capital to remain negative over the twelve months.
The fall is good news for first time buyers in London giving them the chance to buy at a lower price after rapid rise in prices over the past five years.
This compared to homeowners with a mortgage where the average price is £477,807 and house prices are lower by -0.7% for the month although this alone is unlikely to hinder remortgage buyers from securing a new deal from a lender.
North West with strongest price rise
Regions outside of London are seeing a strong rise in the value of property and over a year East Midlands is up by 6.1% followed by the North West higher by 6.0%.
The following table from the ONS shows average house prices and monthly change for first time buyers to August 2017.
| Region | Monthly change | Average price |
|---|---|---|
| London | -1.1% | £423,224 |
| South East | 0.8% | £259,918 |
| East of England | -0.1% | £240,665 |
| South West | 0.4% | £207,369 |
| England | 0.5% | £204,163 |
| West Midlands | 0.4% | £156,639 |
| East Midlands | 0.2% | £154,463 |
| Yorks and the Humber | 1.4% | £136,055 |
| North West | 2.0% | £134,646 |
| North East | 1.4% | £112,319 |
First time buyers in the North West of England have seen house prices rise by 2.0% over a month although the base is low with average prices at £134,646.
Other regions of rising house prices are the North East as well as Yorks and the Humber rising 1.4% for the month.
For the equity release mortgage buyer in these regions the rising values would allow them to access property wealth while remaining their home, using the extra cash for home and garden improvements or gift to a family member or friend.
Cash purchases down the most
Home buyers with cash have found property prices have reduced the most in London down -1.9% or £9,800 for the month to August 2017.
This may be due to the purchase being able to complete quickly commanding a lower price whereas a home mover would need to sell their home first prolonging the sales process.
The average price paid for a cash purchase in the capital is £504,874 which is more than the value of properties purchased with a mortgage at £477,807.
Over the last year house prices in London remain up with cash purchases higher by 2.2% and with a mortgage up 2.7%, the lowest gains for any region in England.
For buy-to-let landlords with existing properties the rise in house prices creates more equity which they can benefit from if they sell in the future.
RICS has reported that the new sales instructions net balance has turned progressively less negative in each of the last three months with -1% for August 2017, compared with -11% in July 2017.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
Learn more by using the property value tracker chart, mortgage costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to improve your quality of life, pay for care at home or even pay university fees for grandchildren.
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