Typically, over the past two decades, first-time buyers in the UK have had a pretty rough ride. With house prices rising faster than wages, larger deposits required, and the pressure of keeping up with increasing rental costs while saving, new buyers are finding it harder than ever to get a foot on the housing ladder. While the Government have introduced schemes such as the Help to Buy loan, waiving stamp duty on properties up to £300,000 for first-time buyers, and even introducing Help to Buy schemes as part of modern developments, it is still a struggle and with the ramifications of COVID-19 still being felt across the globe, it could be on course to get a whole lot harder.
As the housing market slowly reopens following the nationwide lockdown, measures have been put in place to encourage sales and get things moving again including the removal of stamp duty on all properties up to the value of £500,000. While this could be seen as favourable to first-time buyers, it has subsequently fuelled a ‘mini-boom’ with house prices soaring to a record-high over the months of June and July according to new reports.
Figures state that it’s not only house prices skyrocketing, but the number of enquiries is also rising across the country – an increase of 75% according to Rightmove. This could be set to increase further as restrictions on the markets begin to loosen in Wales and Scotland. Interestingly however, things seem to be lagging behind in London where the increase in house prices has been just 0.5% suggesting that the change in people’s priorities post-lockdown may be causing a lack of demand in the capital.
So, where does this leave first-time buyers?
While further new measures are being put in place by the Government to support first-time buyers, these aren’t due to come into effect until at least September, and it is entirely plausible that house prices – and subsequently the amount required for a deposit – will continue to rise between now and then putting further pressure on those saving, particularly when the financial pressures of lockdown are still being felt across the country.
Now more than ever, the UK needs to see an influx of new homes being built that are genuinely affordable. Without these, demand for new homes will continue to surpass supply, and further strain will be put on both the private and social rental markets as those unable to get a foot on the housing ladder must rely on rental properties to house their families.
This article is for educational purposes only and does not constitute investment advice. This article does not amount to an invitation or inducement to buy or sell an investment nor does it solicit any such offer or invitation in any jurisdiction.
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