First-time buyer activity surges in UK

Photo: EEPaul

First-time buyers activity in the UK housing market surged in March 2016, according to valuers.

The total number of valuations carried out by Connells Survey & Valuation last month jumped 8 per cent year-on-year and by almost a quarter month-on-month, something that the firm attributes to strong growth among first-time buyers. Indeed, in March, the number of valuations carried out for those taking their first step onto the property ladder increased by 41 per cent compared to the previous month and 15 per cent compared to March 2015.

“Increased determination on the part of this once-cautious sector, alongside a brightened economic outlook compared to a few years ago, have certainly been key drivers in activity,” says John Bagshaw, corporate services director of Connells Survey & Valuation.

“However a significant reason for the first-time buyer resurgence is the increased uptake of Government plans designed to assist the bottom of the market. The Help to Buy scheme has become more widely recognized and used by those who need a little help getting the capital together to fund a mortgage for a first home. Equally, more first-time buyers are taking advantage of special first-time buyer discounts on certain properties, which has helped those on lower incomes step onto the ladder. While first-time buyer confidence continues to flourish, there’s every reason to be optimistic about the path the housing market is on.”

The first-time buyer sector’s vigorous performance helped counteract a dip in buy-to-let activity in March, says Connells. Despite the rush in applications in the months leading up to 1st April deadline for the new 3 per cent stamp duty surcharge on second homes, the firm says that in the weeks immediately preceding April, valuations in the buy-to-let sector dropped 27 per cent month-month and 36 per cent year-on-year.

John Bagshaw concludes that this is likely to be “a short-term tumble”, with the “fundamentals of buy-to-let [remaining] unaffected by the new levy”.

UK housing market becomes more first-time buyer friendly

18th January 2016

The UK housing market has not been the most favourable for those seeking to buy their first property, as recent years have seen prices continue to climb out of their reach, even with the introduction of Help to Buy schemes to boost the accessibility of financing.

The start of 2016, though, marks a surprise for first-time buyers, with Rightmove highlighting a rise in supply of homes for sale with two bedrooms or fewer.

Stock levels in this sector, which is friendliest to first-time buyers, rose 6.6 per cent year-on-year in January 2016, the highest growth in this market segment since 2007. The price, meanwhile, stayed largely unchanged, rising by just 0.1 per cent.

The good news arrives as the overall market continues to see prices rise 0.5 per cent month-on-month, the second biggest climb in any January since 2007. Demand as measured by visits to the Rightmove website in the first working week of 2016 was also up by 21 per cent on the same period in 2015, suggesting that buyers remain interested.

Nonetheless, there is more choice for first-time buyers. Is this a result of the tax change looming for buy-to-let investors?

From April 2016, the government will cut mortgage tax relief for landlords, which Rightmove suggests leaves them facing a dilemma: “Whether to buy now or wait to see if prices drop in this sector over the next few months.”

With supply rising, “the only beneficiaries of this are likely to be first-time buyers or investors looking to buy and complete before the April stamp duty hike”, notes Miles Shipside of Rightmove. “Some of this increase could be due to some landlords selling up or more first-time sellers marketing to take advantage of any first quarter surge in investor activity and guard against a post-April slump.”

“For several years buy-to-let investors have been enticed by high tenant demand and attractive returns,” he adds, “but as their window of opportunity starts to close it already appears to be opening wider for first-time buyers.”