FTBs can afford to pay more

Affordability models have been credited with a 0.3% rise in the price first-time buyers are able to pay for their properties, raising the average amount they pay for a house to £152,633.

Figures from the Department for Communities and Local Government show the average house price leapt up from £197,000 in August to £198,552 in September. First-time buyers spent £152,633 on average.

The rise in first-time buyer spending boosts the rate of property inflation for first-time properties from 4.1% last year to 7.7% this year.

The inflation rate for former owner-occupiers rose from 7.6% in August to 8% in September due to a 0.9% rise in the price of properties. This compares with a smaller rise of 0.5% over the same period last year.

Terraced houses and flats rose 1.3%, bungalows by 0.9%, detached houses by 0.4% and semi-detached ones by 0.2%.

Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, says: “First-time buyer property prices showed a sharp acceleration to 7.7%, up from 4.1% at the end of last year. Price increases are easily outstripping wage growth.

“But as lenders react to the recent Bank of England interest rate rise, we expect the housing market to begin to cool next year.”

Ray Boulger, senior technical manager at John Charcol, says the increase isn’t due to first-time buyers choosing to pay more but rather because house price inflation is forcing them to find more money either from lenders or their families.

He adds: “Over the past year, more lenders have moved to affordability models which allow them to lend more. This is good news for first-time buyers as it means there is a greater choice of lenders for them to approach.”