House prices are climbing, with easier mortgage lending possibly pushing them even higher. First-time buyers may feel the pinch.
London: The average home price jumped by nearly £6,000 in January. Now, the average asking price sits at £366,189. This is the biggest monthly rise since January 2020.
However, it’s still about £8,942 below the peak from May 2024. Rightmove, the online estate agent, noted more homes are hitting the market. Buyers are also reaching out to agents more than last year.
But there’s some uncertainty ahead. Interest rates and mortgage changes could shake things up in 2025. First-time buyers might feel the squeeze, especially with new stamp duty rules coming in April.
From April 1, the stamp duty threshold for first-time buyers drops from £425,000 to £300,000 in England and Northern Ireland. This change might not hit buyers in cheaper areas, but pricier spots could see a slowdown.
Rightmove predicts a 4% rise in average asking prices for 2025. Jeremy Leaf, an estate agent, says stability is key for buyers. It helps them feel confident about taking on long-term debt.
Even with strong demand, some buyers are hesitating. They’re worried about interest rates and the job market. More homes are available, so buyers are taking their time.
Still, many first-time buyers are racing against the clock to beat the March deadline for stamp duty changes. Tomer Aboody from MT Finance sees good activity in the market, which is a positive sign.
However, more choices for buyers could lead to lower prices. Sellers might pull their homes if they don’t get interest, not wanting their properties to sit unsold.
Colleen Babcock from Rightmove says sellers need to stand out. They might need to offer attractive prices or showcase unique features to catch buyers’ eyes.
Recently, The Guardian reported that mortgage rules might get a makeover. The Financial Conduct Authority wants to simplify lending to help boost the housing market.
Mark Hollands from Bluestone Mortgages believes lending rules have been too tight. Many first-time buyers struggle with affordability and saving for deposits.
He hopes the government will ease these pressures and work with the mortgage industry to tackle the housing crisis. Innovative solutions could help more buyers enter the market.
