In the UK asking house prices have risen to record levels and are £55,000 higher over the last two years before the pandemic started.
Average asking prices are £55,000 higher over the last two years compared to a £6,000 rise for the two years before the pandemic, says Rightmove.
Properties coming to the market have seen values reach a record high of £367,501 rising 2.1% or £7,400 for the month and 10.2% year-on-year
For remortgage buyers with equity gains, you can take a further advance rather than moving and use this to add an extension or for home improvements.
Activity higher than pre-pandemic levels
The number of buyers enquiring for properties is 31% higher than pre-pandemic levels in 2019 although -14% lower than the frenetic demand last year.
As a consequence of this demand, the number of available properties is down -16% compared to last year and -55% lower than 2019 with shortages in two and three bedroom semi-detached homes.
This table from Rightmove shows average UK asking prices (excluding London) for April and May 2022 for each sector and annual change.
| Sector | May | April |
Change |
|---|---|---|---|
| First time buyers | £223,111 | £220,466 | +8.3% |
| Second steppers | £337,030 | £333,053 | +11.2% |
| Top of the ladder | £680,938 | £655,593 | +11.9% |
With strong demand and lack of new homes means property for second steppers are up 11.2% year-on-year with average values of £337,030.
For the top of the ladder asking prices are 3.9% higher for the month and 11.9% up for the year with average property values at £680,938.
For home movers wanting to trade up when prices are rising, they may find their next property is more expensive which means they need a larger deposit or mortgage although interest rates are rising.
See how much your monthly mortgage interest payments would be for a trading up to a larger property at this link:
Mortgage cost calculator with instant results and figures for your new home.
There is more interest in London from local and international buyers since the lockdown with asking house prices recovering, rising 7.6% over the year.
The borough of Westminster has seen asking prices rise 11.7% year-on-year with average values of £1,455,674 and Merton up 11.5% and values of £736,679.
If you have an interest only mortgage, an equity release buyer can use a lifetime mortgage choosing to pay interest or not and access additional cash you can use for home improvements.
First time buyer affordability stretched
The mortgage payments for a first time buyer home has increased to an average of £901 per month and overtakes the average rental payments of £887 per month.
This is based on a 90% loan to value for a fixed two year rate based on a home with two-bedroom or fewer and the equivalent for renting.
Over a ten year period mortgage payments today are only 11% higher due to the current low interest rates while rental payments are 40% higher offsetting the rise in house prices over the decade.
Asking prices for first time buyers is 8.3% higher over the year and means they would require a higher deposit, larger mortgage or higher earnings to purchase their first home.
Income affordability is part of the equation for first time buyers borrowing from a lender as they will also need a large enough deposit.
For someone buying on their own for the first time on an average salary borrowing 4.5 times their income, the deposit required has increased from 25% or £35,053 ten years ago to 34% or £74,402 today.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home to a larger property and looking for a competitive mortgage deal. Learn more by using the property value tracker chart and equity release calculator.
Start your free home moving quote and we can find the mortgage with lowest rates for your new property at this link:
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If you are releasing equity from your home to improve your quality of life, we can recommend lifetime mortgages so begin your equity release quote for the latest provider offers.
