Mortgage costs soar for first time buyers

27-Feb-2014

First time buyers may end up having to pay more for their properties in London, according to new findings.

Data compiled by Reuters showed that limited supply of housing and strong demand from overseas investors is having a particularly detrimental effect in the capital.

The increase in house prices is thought to be driven by the economic recovery and low interest rates. According to a survey of 27 economists and analysts, house prices in the capital will rise another seven per cent this year.

Speaking to Reuters, Gary Styles, a spokesman for GPS Economics, said: "London house-price growth is completely out of step with the rest of Britain. This dichotomy is likely to continue for the next year or so before expectations return to more sustainable levels."

The findings were very similar to a report published by property website Rightmove last month.

Its research showed that asking prices across England and Wales rose by one per cent month-on-month in January to reach an average of £243,861.

In addition, the average home has seen its value rise by £2,406 this month. In fact, the report by Rightmove showed that prices have already risen by seven per cent in London, taking the average price to £514,704.

According to the survey, property prices are currently too high. It gave a consensus rating of 6.5 on a ten-point scale, where one is very undervalued and ten is very overvalued.

Tony Williams, London-based independent property market analyst, told Reuters: "There will be more buyers, and at this stage the supply has not increased. There will be a lot of people thinking,`I will lock in my mortgage now'."

Recently, separate figures published by home.co.uk have revealed that property prices in Greater London have risen by 27.8 per cent while prices in the north-east have fallen 5.8 per cent.

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