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First-time buyers are facing higher asking prices because of demand from buy-to-let investors.

First-time buyers are facing asking prices almost 10% higher than a year ago because of demand from buy-to-let investors, the website Rightmove has said. The average asking price for homes coming on to the market has risen by 5.6% over the past year to a new high of £296,549, the property website said on Monday, but sellers of typical first-time-buyer homes are asking 9.6% more than 12 months ago.

The average asking price of houses and flats with up to two bedrooms has increased by more than £8,000 to £184,676, it said, making it increasingly difficult for first-time buyers to build up a deposit. 

Rightmove said such buyers were facing competition from buy-to-let investors, and that a shortage of property coming on to the market was adding to their difficulties. It added that the number of first-time properties coming up for sale was 8% down on October 2014, and would-be homeowners needed to win over “the hearts, minds and pockets of sellers”.

The buy-to-let market has picked up in recent years after slumping during the financial crisis. Pension freedoms and a price war on mortgage rates have both helped investors finance purchases. Last week, the Council of Mortgage Lenders said the number of loans taken out for buy-to-let purchases was up by more than a quarter year-on-year in August.

“Both investor landlords and first-time buyers looking to buy smaller homes are finding them in short supply,” said Miles Shipside, director of Rightmove. “As they’re typically owned by potential first-time sellers, the price gap and costs of moving to the second step on the housing ladder deter them from coming to market. Competition is most fierce in this sector, with first-time buyers and buy-to-let investors going head to head for the same properties.”

Shipside said first-time buyers needed to win over sellers. “Buy-to-let investors will give sellers logical reasons for accepting their offer over a first-time-buyer, so do whatever you can to be not only among the first to view, but also to meet or communicate with the owner and make sure they know how much you would love to own, occupy and cherish their property,” he said.

Across England and Wales, Rightmove said the average asking price of new homes coming on to the market was 0.6% higher in October than September, and in most areas outside the south-east it had fallen. On an annual basis, asking prices were up everywhere, with growth ranging from 1.9% in Wales to 8.7% in the east of England. In London, new sellers are asking 8.3% more than a year ago, with an average asking price of £630,060.

Newham in east London was the London borough where prices had risen furthest, with the average asking price 18.1% higher than a year ago at £376,073. Nearby Tower Hamlets was not far behind, with an 18% year-on-year increase. Prices in that borough, which includes Canary Wharf, now average £617,075.

Agents around the country told Rightmove that they had seen strong demand from tenants, with some reporting that properties were renting on the day that they came to market. Danielle Cosway, a business manager at Clear Property in Exeter, said: “Over the past three months, demand for rental property has increased massively. We just can’t get enough lettings stock to satisfy the demand, and we’re struggling to keep properties on the market for more than 24 hours.”

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