The Housing Market could be Easier for First Time Buyers in 2017
With house prices surging and incomes stagnant, first-time buyers have been being pushed out of the property market for several years. The typical first-time buyer in the UK is now aged 30. First-time buyers have found it difficult to enter the market following the financial crisis but recent data is showing that this year could be the year that first-time buyers re-enter and flood the market.
When the news of the second stamp duty tax that was applied in 2016 was announced, the buy-to-let market surged in activity which in turn was unfortunate for first-time buyers’, leaving minimal supply for those hoping to purchase rather than rent. The availability of properties with two and fewer bedrooms fell by more than 15% when buy-to-let purchasers rushed to complete transactions.
A report from Rightmove showed that there is more than a 13% decline year on year in buy-to-let purchases since the stamp duty tax was implemented. With more available 90% and 95% LTV mortgages at record lows and lenders becoming more flexible with lending criteria, 2017 could be a easier time for first-time buyers.
In 2017 we are expecting to see more choice for first-time buyers and less competition than in 2016, but first-time buyers should take note of how quickly the competition negotiates and closes deals in the competitive market.
Buyers Will Have to Act Quickly
When comparing December 2016 with December 2014, the overall market activity is up by more than 40%, including first-time buyers up by 50% and people looking to remortgage is up by more than 65%. This year first-time buyers will have more options and a strong negotiation power, but they will also have to act quickly.
Buyers that are searching for small properties with two bedrooms or fewer might find that prices have increased since they searched last year, as the average price is now up 6.4% from the same time last year. However, these asking prices might not be the actual market value or the price of the property until it’s actually sold.
More Sellers are also Entering the Market
New seller’s entering the market are up by more than 25% during the same time last year, indicating an ease on the supply for 2017. For Buyers they will have more property to choose from, therefore sellers that are expecting the same demand as they had last year might be too optimistic with their prices. This will give first-time buyers on a budget an opportunity to negotiate a fairer price, especially while supply is higher than usual.
The property market has regained a lot of momentum with consumers with low mortgage rates and higher employment rates. The buy-to-let market has contracted by 26% but first-time property investors can quickly fill the void and have less competition and more attainable prices.
As we head into an uncertain 2017, lenders are reporting a very busy January with mortgage enquires showing that consumers are still confident in the UK property market. Interest rates are still at a record low, demand has diminished, supply has started to increase and government schemes like Help-to-Buy are still helping to manage prices. First-time buyers should take this window of opportunity to get on the property ladder before the competition returns.