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First-time buyers 'willing to overpay'

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With confidence in the UK property market continuing to rise, first-time homebuyers are becoming increasingly likely to offer a premium for a property in attempt to secure a footing on the property ladder.

According to Yorkshire Bank, one in five first-time buyers are now prepared to pay over the odds for a property, which reflects a significant development from 12 months ago when only 13 per cent would do the same thing.

The major factor behind this trend is that buyers are no longer waiting for house prices to fall, with all major surveys in the last month pointing to a distinct market recovery. It is a trend that has not only seen the welcome return of the first-time buyer but has also given fresh impetus to the property investment industry in the UK.

The new statistics show that in December, the number of people expecting property prices to rise reached an 18-month high of 55 per cent. The effects of a renewed sense of confidence have been gradually felt in all areas of the market in recent weeks and Yorkshire Bank's Gary Lumby has anticipated that this trend will continue to boost the industry in the coming months.

"Buyers are starting 2006 in a more positive mood than last year, when there seemed to be a lot more uncertainty regarding where the housing market was going," he said.

"The market has been showing some encouraging signs of growth in the last few months. House prices have been rising - albeit modestly - and the number of mortgage approvals is up," he added.

"In fact, the Council of Mortgage Lenders recently reported record December lending figures. This more positive outlook is being supported by expectations of a further cut in interest rates in the next few months."

Mr Lumby's assessment is backed up by last week's report from Lombard Street Research (LSR) which anticipated that the current movement was building towards the potential of "double digit house price inflation" by the end of the year. LSR also argued that the growth was "sustainable", while it predicted that a housing boom was not out of the question.

The Yorkshire Bank survey also found that 16 per cent of sellers would be unwilling to accept offers that were less than the asking price, which is up four per cent from the same month in the previous year.

For those looking to invest in residential property, the high levels of confidence in the market are certainly encouraging and as prices once again start to rise across the UK, expectations are high for attractive returns for those selling property in the next 12 months.

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