First-time buyer house prices in London fell over course of Covid-19 pandemic

The capital remains the most expensive place in the country for wannabe homebuyers though
Daniel Lynch
Anna White10 February 2021

London is the only region of the UK where homes for first-time buyers got cheaper over the course of the Covid-19 pandemic. 

The average price tag for a property purchased by those on the first rung of the ladder has fallen by 1.4 per cent over the last 12 months, new data reveals today. 

This drop takes the average asking price of a first-time buyer home in London to £474,950, according to Rightmove, a saving of £6,592. 

This saving, in combination with the current stamp duty tax break means a total discount of £21,592 on homes worth more than £500,000.

For homes below this threshold there is no stamp duty to pay until the end of March.  

A window of opportunity to buy in London

Although the capital is still the most expensive place in the country for wannabe home-owners, it is the only region where asking prices fell for this particular buying tribe. 

“Despite higher asking prices in London, first-time buyers in the capital appear to have a window of opportunity to negotiate a good deal,” says Tim Bannister, director of data at Rightmove. 

Levels of supply for first-time buyers rocketed in London compared to other cities, he continued.

“If you look at some of the other major cities such as Bristol, Birmingham and Manchester, homes listed for sale were only up between five and seven per cent. But in the capital, total stock aimed at first-time buyers rose by more than a third last year.” Such a swell in supply puts downward pressure on prices. 

The greatest levels of activity by prospective first-time buyers have been in the outer boroughs of London where their money goes further and may stretch to a property with a garden.

Following the first national lockdown outside space shot up the buyer priority list over the convenience of living within the cool confines of inner London – for the time being at least. 

Neil Ewen, a director at Central Estate in Walthamstow, is seeing high demand on the outskirts of London but thinks the overall asking price average is being pulled down by falls in the expensive inner core of the capital.

“There is no real incentive to buy near the centre at the moment [because of the lockdown],” he adds. 

David Galman, sales director at Galliard Homes, thinks developers may have offered deals and reduced prices slightly over the last year to sell homes in challenging times. Again, this will bring the average asking price down.

The housebuilder is among a handful that are offering to pay stamp duty for customers until October in order to keep the market moving. 

Prices rocket in the North West

In the north west of England the average asking price of a first-time buyer property climbed 8.6 per cent from January 2020 to last month, taking the average price tag from £133,011 to £144,453. This was the biggest jump in the country. 

First-time buyers in Yorkshire and the Humber saw the second greatest rise of 8.4 per cent taking the average asking price from £136,617 to £148,060, followed by the West Midlands where asking prices rose seven per cent to £165,510. 

“The north west possibly has a stock of property that are easily accessible for first-time buyers – places such as Oldham, Rochdale, Bury and Blackburn. These former mill towns have lots of terraced properties around the £100,000 to £200,000 mark,” says Richard Powell, director at Ryder & Dutton. 

The average asking price of a first-time buyer property increased 3.9 per cent to £200,578, over 2020, despite the global pandemic, breaching the £200,000 threshold for the first time since August.