UK house prices‘ modest 0.9 per cent year-on-year increase for April has helped first-time buyers, according to the Nationwide Building Society.

The lender’s monthly index showed a 0.4 per cent rise in prices in April compared with the previous month bringing the average house price in the UK to £214,920 compared with £213,102 in March.

Hank Zarihs Associates | First time buyer mortgages stimulated by minimal house price growth

The building society’s chief economist, Robert Gardner, said: “Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.”

The lender said data from surveyors revealed new buyer inquiries had remained subdued for the beginning of 2019. Bank of England mortgage approvals for house purchases in March fell to 62,300 from 65,340 in February, although net lending for mortgages increased to £4.2bn.

UK House Prices – First-time buyer mortgage approvals grow

However, the Nationwide said because April was the fifth consecutive month of increases below 1 per cent this had worked in buyers’ favour.

“While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first-time buyers entering the housing market in recent quarters,” said Gardner.

He added that the number of first-time buyer mortgages had continued to approach pre-financial crisis levels in recent months.

“While house prices remain high relative to average earnings, low mortgage rates have helped to support mortgage affordability. Indeed, raising a deposit appears to be the major barrier for prospective first-time buyers, since the cost of servicing the typical mortgage remains in line with or below long-run averages as a share of take-home pay in most regions of the UK.”

Finance brokers Hank Zarihs Associates said first-time buyer growth was a good sign for developers seeking property development funding, fast bridging loans and construction loans for starter home schemes.

Online mortgage broker Trussle’s Dilpreet Bhagrath said subdued house prices meant the prospect of homeownership felt more attainable.

“This slowdown opens a window for first-time buyers who already have a deposit saved up. However, for many, saving for a deposit is no easy task. More than two in five parents admit to still having grown-up children living at home, highlighting the financial struggles facing young people as they attempt to get a foot on the property ladder.”

Gardner pointed out that despite sluggish house price growth, London and the South were still suffering from acute affordability pressures.

“In 2018, first-time buyer incomes were in line with or below average incomes in most regions. However, in the East, South East and London, first-time buyers’ incomes were significantly higher than average incomes in those regions, 60 per cent higher in London, illustrating the extent to which many prospective buyers are priced out of the market in those areas.”

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