The pandemic has led to people losing their jobs, incomes being severely hit, and a major slump in the economy, which is inevitably going to affect house prices and the market. According to the government’s official forecaster, the Office for Budget Responsibility, there could be an average fall in prices of 11 per cent by the end of 2021.
While first-time buyers may be rejoicing about the prospect of cheaper property, a report by the Resolution Foundation suggests that homeownership could become increasingly difficult for this group of buyers.
It would typically be seen as the ideal opportunity for first-time buyers to get on the property ladder. Some young people in stable jobs, with savings, and who had the chance to put more savings aside during the lockdown will benefit the most. But there are four major obstacles for first-time buyers.
Mortgage lenders will be asking for a larger deposit. A long-term financial downturn means that lenders need to protect themselves against borrowers being unable to repay their mortgage.
Over half of renters aged between 25 and 34 do not have any savings, and many others have had to use all or part of their savings to survive during the lockdown and lower incomes.
The Stamp Duty holiday would not be of benefit to first-time buyers. Many first-time buyers would not be looking to purchase a home expensive enough to qualify for stamp duty, and even if that wasn’t the case, they would have to move quickly to complete a sale before the 31 March 2021 deadline.
With many jobs being lost, some young workers may find they have to relocate for new jobs, which causes extra expense, and a hit on savings.
A drop in prices won’t make things easier for the typical young first-time buyer. The recession will drive the pre-existing inequalities and the growing divide between those who are in a position to purchase their first home and those for whom it is increasingly out of reach.
If you are looking for property for sale in Retford, talk to our team today.