First time buyers

Number of First Time Buyers On The Rise

First time buyers are on the rise in the UK according to new data, a development that is causing commentators to be cautiously optimistic about where the housing market is heading. 

The Numbers

A monthly report released by Connells Survey & Valuation in July found that first-time buyers were behind roughly 50 per cent of all purchase valuations on properties in the UK. That's a 6% rise over the five-year average. 

The news followed directly on reports from UK Finance that in June the first-time buyers market was "soaring", having risen 26% on the previous month and 9% on the figures for the same month a year earlier. It was the highest rate in over ten years.

All this points to a steady uptick in the numbers of families, couples and individuals who are taking real steps towards becoming property owners for the first time.

Cautious Optimism

Despite what sounds like a promising trend in what has been a relatively troubled UK housing market for the past few years, the experts are not completely ready to celebrate just yet.

John Bagshaw, Connells Survey & Valuation’s corporate services director, points out that when prospective property owners show interest in purchasing a home by getting a valuation carried out, it does not automatically indicate that they have the means to do so. He explained that, while the market has had a significant boost in demand from those eager to become homeowners, encouraged by a solid employment situation and low mortgage rates, purchasing a home may not actually be feasible at this point for many would-be buyers.

 "Economic conditions are still tough," Bagshaw said. He added that the problems that have plagued the UK housing market in recent years – including skyrocketing property values and ballooning general cost of living – still make it difficult for the average person to save for a deposit.

Bagshaw pointed to the fact that house prices are roughly eight times higher than average earnings, and going up nearly twice as fast, at a rate of about £10,000 a year. He indicated that first-time buyers could use some help achieving their dream of becoming property owners, and suggested that they might be given a pass when it comes to stamp duty. 

What this means for the buy-the-let market

The seemingly healthy signs in the private market are also hiding some not so healthy figures when it comes to commercial real estate. The number of new buy-to-let landlords entering the market has declined. 

The Connells Survey & Valuation report points to recent government policies that have dealt a blow to incentives for entering the rental market. These policies include the increases in stamp duty and the reduction in mortgage relief for buy-to-let landlords.

Bagshaw said that the trend does not mean that the buy-to-let sector has collapsed, but that it is increasingly dominated by existing landlords rather than new ones. He pointed to the stamp duty surcharge, as well as the recent policy blows to tax relief on mortgages for buy-to-let investors as the main culprits that could be preventing new landlords from setting up shop.