Now that the UK is officially in a recession, many people will be concerned about how they may be affected. This includes many first-time buyers, some of whom may now be left high and dry.
Cheaper Houses, But Harder to Buy
Although there has been a recent upswing in property sales following the lockdown, many estate agents now predict that we will soon see a slump which could continue for many months. In the weeks following the reopening of the market, house prices have increased, but government forecasters predict that they will then fall significantly, with a drop of 11% expected by the end of next year. The prospect of cheaper houses may sound like a positive development for first-time buyers, but unfortunately there are other factors at play.
The latest information on the housing market shows some changes that are sure to affect first-time buyers in particular. Some lenders have moved the goal posts, meaning that would-be homeowners now need more of a deposit in order to secure a mortgage. For those who have been left unemployed and forced to live off savings during the lockdown, the prospect of saving yet more for a deposit is likely to be a considerable challenge. Additionally, people who now find themselves needing to move for new jobs will be spending large amounts on relocation.
The stamp duty “holiday” announced by the UK government will also be of little benefit to most first-time buyers. Those looking to purchase their first home had typically looked at houses that fell below the threshold. However, those looking to buy in London or other expensive areas could make savings. Keeping abreast of the market is important, with the latest information available via sites such as https://www.samconveyancing.co.uk/news/housing-market-report.
Some Positive Points
It’s not all bleak news. It’s been suggested by some mortgage brokers that people renting in more expensive postcodes may opt to purchase buy-to-let properties elsewhere as a route on to the property ladder. Whilst the “Bank of Mum and Dad” is no longer a viable option for those looking to take out a mortgage with Nationwide, other lenders have not followed their lead in restricting parental contributions. First-time buyers with stable jobs may even have succeeded in increasing their savings pot whilst stuck indoors during the lockdown and may even benefit from the current housing trends.