Will the recession be another hurdle for first time buyers?

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Yesterday it was announced that UK was now in its biggest ever recession following lockdown due to Covid-19. This has caused finance experts to be concerned for the future of the property market. After lockdown, the market saw the pent-up demand released, with July and August for estate agents breaking records. At Evolution properties we broke records of properties sold and let out, with Andrew Bush suggesting he had never seen the market like it in his whole thirty years of being an agent! This month especially has been a landlord’s market with a high demand for rental properties, with properties being snatched up very quickly. There are many variables that could have caused this high increase in demand, such as Stamp duty holiday, release of pent up demand, change of job, change of priorities, as well as the normal list of reasons for moving.

For first time buyers this then to some extent has made it harder to get on the property ladder, as before they would have had the upper hand by paying no stamp duty under £300,000 in England, Wales and Northern Ireland, However now, there is a stamp duty holiday for everyone, so currently until the end of March next year, no one on their main property will pay stamp duty for a property with a value under £500,000, therefore this means further competition. Not only is this an additional worry, but there is concern for deposits on properties to be higher, as currently they are fluctuating to go with demand, however there is concern they will raise once again, so mortgage lenders have further protection on themselves. When saving for a deposit, due to mass redundancies, saving for some first-time buyers may also cause issues, as with lower income, they may find it harder to save for a deposit, or take a lot longer.

While there has been a mass surge for properties in the UK over the last couple of months, with a recession, raises further questions for the future of the property market. Will there be a decline in housing prices? Even though some suggest there will be, it is hard to predict exactly what will happen, as originally the property market was not predicted to be like it has been throughout July and August so far, no one could have predicted that. Therefore, it is hard to predict exactly how this recession will affect the property market currently.

The Resolution Foundation has requested additional government support for first time buyers, as there is no longer leverage over other applicants when purchasing a property.

READ MORE: https://www.bbc.co.uk/news/business-53755590

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