Buyers and homeowners feel the squeeze as market shifts drive up housing costs

These new findings are part of an update to the comprehensive First-time buyers: age old problems, modern solutions report that was published last year, supported by the Skipton Group. Today’s first-time buyers face a double affordability challenge – an almost record-high cost of buying a home and the end of record-low mortgage rates.

The stamp duty reforms have added £6,250 to the cost of buying a first home worth £425,000. And this compounds Skipton’s findings that almost 90 per cent of potential first-time buyers in Great Britain today cannot afford to get onto the property ladder based on their own financial situation.

Last month, Skipton Group brought together senior stakeholders from across the financial services and housing ecosystem at a Parliamentary reception at the House of Commons, focused on solving the UK’s pressing home affordability challenge for both renters and home buyers.

Jen Lloyd, head of mortgages at Skipton Building Society, says: “The country has a chronic lack of home affordability and last month’s reforms are undoubtedly making things much tougher. Significantly more first-time buyers are having to find additional funds, and we recognise the real financial struggles and anxiety this is undoubtedly causing people.”

She adds: “Only actions, not words will change this and what’s needed is genuine collaboration across Government and the wider housing industry to solve what is ultimately a systemic issue.”

Meanwhile, research for the Compare the Market home insurance team found that more than half of homeowners are choosing to improve their property rather than move, as mortgage rates and wider living costs bite.

Some 52 per cent of 1,000 homeowners surveyed across the UK said they had either renovated over the past year or plan to do so in the next 12 months.

The cost of moving, cost of living pressures, and emotional attachment to their current home were the top reasons for staying put, researchers found.

Homeowners living in Manchester, London and Edinburgh are the most likely to have picked a revamp over relocation - with those in Sheffield, Belfast and Liverpool being particularly inclined to move - the survey found.

Several banks have launched more sub-four per cent mortgage rates onto the market in recent weeks or eased their lending assessments, which could make it easier for some borrowers to access deals.

Alongside stamp duty changes, households have also had to endure "awful April", during which various bills were hiked.

Figures released by the Bank of England last week showed that the number of mortgage approvals made to home buyers fell for the third month in a row in March, in signs of a slowdown as the stamp duty changes loomed.

The Bank of England said 64,300 mortgages for house purchases were approved in March. Approvals are an indicator of borrowing taking place in the future.

Meanwhile, annual house price growth slowed in April to 3.4 per cent from 3.9 per cent in March and also fell on a monthly basis by 0.6 per cent, data from Nationwide showed.

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Looking at Yorkshire’s housing market, Patrick McCutcheon, head of residential at Dacre, Son & Hartley, says: “We are starting to see some cautious recovery driven by traditional pressures to move and an expectation that base rates and thus mortgage costs will continue to fall.

"There is some heavy discounting in play, but that tends to be on the more challenging properties where there is an urgency to sell.”

At the uppper end of the market, Edward Hartshorne, managing director of Blenkin & Co, adds: "March and April saw some of the best trading months in Blenkin & Co's 33-year history.

“This says a lot about today's unexpectedly robust market but also paints a picture of an over-crowded estate agency market where the best performers take the lion's share.

"In this unpredictable world, property sellers need an agent able to communicate efficiently and respond in real time to the vagaries of the market.”