First-time buyers are gaining an edge over buy-to-let investors when it comes to buying property, yet more are anxious about securing a mortgage.

What’s the latest?

First-time buyers are feeling more optimistic as house price growth stalls and competition from buy-to-let investors falls away.

While a third (33%) of people trying to get on to the property ladder still think buying a home will be 'extremely difficult', that number is down from 39% a year ago.

At the same time, the proportion who see rising house prices as being their 'biggest obstacle' has dropped to 27%, compared with 37% in 2016.

However, first-time buyers are more anxious about their ability to get a mortgage than they were previously, with 12% citing this as a major issue, up from just 5% last year, according to specialist lender Aldermore.

The bank's commercial director of mortgages, Charles McDowell said: “Although property prices remain a hurdle, slower house price increases have given a glimmer of hope to those trying to get on the ladder for the first time.”

The research comes as figures from UK Finance show that first-time buyers borrowed £5bn in July, 14% more than they were advanced a year earlier, although slightly down on June’s total.Above: In Telford, Shropshire, is this three-bedroom barn conversion on sale for £160,000

Why is this happening?

The pace at which house prices are rising has slowed significantly during the past year, increasing at an annual rate of just 2.1% in August, according to Nationwide.

This slowdown has provided potential first-time buyers with a bit of breathing space to raise a bigger deposit without having to worry that they risk being priced out of the market if they delay making a purchase.

At the same time, a raft of tax changes has led to a steep fall in the number of buy-to-let landlords buying homes.

Landlords and first-time buyers typically purchase the same types of property, so the fall in activity from investors means those buying their first property face less competition.Above: The perfect first-time buy? Near the station at Southend-on-Sea, Essex, this two-bedroom flat is on the market for £244,995

Who does it affect?

While the slowdown in house price growth and the fall in competition is a positive for first-time buyers, they still face significant challenges to get on to the property ladder.

Data from UK finance showed that the typical first-time buyer needed to borrow 3.6 times their annual income to buy a home. It said they were advanced an average of £139,000 and put down a 15% deposit, or around £24,529.

But record low mortgage rates mean monthly repayments only accounted for an average 17.4% of their takehome pay.Above: Near Hither Green station in London's Lewisham, this two-bedroom flat with loft room is on the market for £375,000

Sounds interesting. What’s the background?

The majority of would-be first-time buyers are still having to make considerable sacrifices in order to get on to the property ladder.

Three out of five people are currently living with family or friends or would consider doing so in order to save money, according to the Aldermore research.

A third of first-time buyers also think it will take them five or more years to get on to the property ladder.

The study found that 26% of people think building more homes would help those trying to buy a property, while 25% would like to see the introduction of a special stamp duty-free allowance for first-time buyers and 24% think better mortgage products should be introduced.Above: Perfect for entertaining friends, this four-bedroom family home is on the market for £317,995, in Midsomer Norton – close to Bath and Bristol

Top 3 takeaways 

  • First-time buyers are feeling more optimistic as house price growth stalls and competition from buy-to-let investors falls away
  • A third of people trying to get on to the property ladder think buying a home will be extremely difficult, down from 39% 12 months ago
  • The proportion who see rising house prices as being their biggest obstacle has dropped to 27%, compared with 37% in 2016

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