Bad news for first-time buyers as price of smaller properties jumps nearly 2%

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First-time buyers are facing a steeper uphill climb after the price of a two-bedroom house jumped nearly 2% in November.

House-hunters taking their first steps into the market will have to stomach a price hike of 1.7%, or £3,256, this month if they want to buy a house with two bedrooms or fewer, according to figures from Rightmove. 

On a yearly basis, the leap in prices is even more serve, rising 8.2% or £15,000. 

However, the firm's house price index said the overall market had seen its lowest fall in average asking prices since November 2011, with the cost of property down 1.1% or £3,452 lower. 

Miles Shipside, director and housing market analyst at Rightmove, said house price rises were outstripping wage inflation, exacerbating the struggles of first-time buyers. 

"Price resilience is not good news for cash-strapped aspiring first-time buyers, and in spite of the more subdued time of year, the smaller properties that they typically target have increased in price this month, the only market sector to show an increase," he said.

"Compared to 12 months ago, the price of newly marketed properties with two bedrooms or fewer is up by over 8%, twice the rate of the sectors containing properties with three bedrooms or more."

The study found that the two groups most down-beat about their housing situation were people living with their parents and 21 to 24-year-olds. 

Rightmove said Chancellor Philip Hammond needed to take action in his Autumn Statement on November 23 to help more young people on to the housing ladder. The average first-time buyer is currently around 33.

"As well as helping people's home-ownership aspirations, activity at the bottom rung of the ladder helps the rest of the market to move and through that boosts the wider economy," Mr Shipside added.

"Short-term options that might be top of a first-time buyer's list would be a stamp duty holiday exclusive to them. However, there are dangers to increasing demand unless this is matched by policies to improve supply, and more radical steps need to be taken to remove some of the barriers preventing more affordable homes to buy and rent from being built in the right locations."

The figures come after The Royal Institution of Chartered Surveyors (RICS) said on Thursday that home-buyers were facing a frustrating search for housing, with demand continuing to rise as the number of available properties falls.

The RICS report said interest from potential buyers stepped up for the second month in a row, as 10% more surveyors saw demand rise in October.

A Department for Communities and Local Government spokesman said more than 300,000 people had been helped into home ownership by government schemes since 2010.

He said: "Our government-backed housing schemes, including Right to Buy and Shared Ownership, help hundreds of people into home ownership every day.

"This government is building a country that works for everyone which is why we have announced the largest affordable housing programme since the 1970s, doubling the budget to £8 billion to deliver an extra 400,000 homes.

"We will soon be publishing a White Paper that will set out further measures on how we can build more homes and help those that are only just managing."


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