House prices for first-time buyers rising at fastest pace for nearly a decade

The average price of properties bought by first-time buyers rose by just over 13 per cent over the year to September 2014, according to figures from the Office of National Statistics.

This represents the highest annual increase in prices for first-time buyers since March 2005, when prices increased by 18.3 per cent over the year. The ONS figures indicate that in September 2014 the average price paid for a house by a first-time buyer was £209,000.

There was also a significant rise in the average price for properties bought by homemovers. The jump of 11.5 per cent was the highest annual increase for existing owners since July 2007, making the average price paid £314,000.

Average house prices leapt in all nine English regions, with the biggest increase once again in London at 18.8 per cent followed by the East (13.4 per cent) and the South East (11.6 per cent).

Overall, the report shows that UK house prices increased by 12.1 per cent in the year to September 2014. Excluding London and the South East, the figure is 9.1 per cent.

Separate research from property search engine Placebuzz.com suggests that around a third of young first-time buyers would look to move again within two years. Its report shows that they are flexible on the location, condition and type of their first purchase to get onto the property ladder.

"House price growth has often been billed as a cause for concern over the last year, but for many of the UK’s homeowners the recovery has delivered a long awaited boost to their housing equity," said Brian Murphy, Head of Lending at Mortgage Advice Bureau. "Recovering property values are giving many the leverage they need to negotiate a better mortgage deal with lower monthly repayments, so it’s unsurprising that remortgage applications are rising as a result.

"The fact that annual house price comparisons still remain in double figures might seem detrimental to first-time buyers, but there has been a visible cooling in the rate of house price growth in recent months. This has helped to maintain consumer demand, with purchase applications up by almost a fifth compared to this time last year. Overall year-to-date mortgage applications have also already surpassed the 2013 year total."

Jonathan Hopper, managing director of property search consultancy Garrington, said he thought the property market was likely to "stumble rather than stride" into the New Year.

"Estate agents are already starting to see a drop-off in viewings, although a large part of this will be down to the traditional seasonal slowdown," he said. "However, concerns over global economic uncertainty and instability are likely to weigh heavily on consumer confidence.

"There is no evidence that prices are about to drop off a cliff, and lenders are offering some fantastic mortgage deals at the moment. Motivated sellers are also dropping their prices to attract pre-Christmas buyers. But what the housing market really needs in January, is a super-charged boost in activity to regain some of that lost momentum."

According to chartered surveyors e.surv, house purchase lending recovered in October after three months of slowdown, as monthly house purchase approvals rose 1.1 per cent.

Richard Sexton, director of e.surv, said: "The purchase mortgage market is self-correcting to operate at a more constant, stable pace – the very reason that MMR was introduced. Now that regulatory changes have tightened up the nuts and bolts of the lending process, we can look forward to careful constancy rather than the unhealthy acceleration we saw before the recession. Far from the screech of brakes, this is the sound of a well-oiled engine humming in a sustainable gear."