First-time buyers are struggling to find a house as the gap between the supply and demand for two-bedroom properties widens, a new report found.
The price of a typical first-time buyer home is leaping by £1,250 every single month, putting home ownership out of reach for many. The demand for smaller homes is further compounded by older couples looking to downsize, pushing prices up even more.
According to Rightmove, the number of online enquiries per property for homes with two or fewer bedrooms is a quarter higher than for those with three or more bedrooms. Enquiries for all homes were up 22 per cent in June compared with 2014.
The online agent said the serious shortage of suitable properties for first-time buyers highlighted ‘the need for an urgent and marked increase in the overall housing stock’ amid fears that prospective homeowners were hitting ‘their affordability ceilings’.
Miles Shipside, of Rightmove, said: ‘The greatest mismatch between demand and supply is at the lower end of the property ladder.
‘No doubt many buyers in this category would like to afford to buy a larger home, but have had to accept that it is out of their reach and downsize their aspirations to increase their chances of a successful purchase.
‘The challenge for government, planners and developers is how best to ensure the right properties are built in the right locations and at more affordable prices.’
The website, which advertises properties for 90 per cent of UK estate agents, said enquiries for all homes were up 22 per cent in June compared to a year earlier.
By contrast, the number of properties coming to market was 11 per cent lower than the same period in 2014.
While many Britons are forced to wait longer to buy their first home, many existing homeowners are preparing for the first hike in their mortgage rates in eight years.
The Bank of England has warned interest rates could rise within months from its historic low of 0.5 per cent.
The Bank has not raised the base rate since July 2007, and cut it to its current level in March 2009, but governor Mark Carney, has now told families to prepare for rates to rise as soon as ‘the turn of this year’.
Figures from the Council of Mortgage Lenders reveal 1.8million homeowners have never experienced a rate rise because they took out their first mortgage after 2007.
Mark Harris, of mortgage broker SPF Private Clients, said: ‘With interest rates at a rock bottom 0.5 per cent for several years, there will be many first-time homeowners who will simply never have known a rate rise.
‘It will come as a huge shock, particularly for those not locked into a fixed rate.’