News

News

The number of first time buyers hits a record high hits a record high

Despite infl ation hitting a 40-year high of 9% and the country grappling with the worst cost-of-living crisis seen in over a generation, a new study from Stipendium (a life events management platform) has shown that the number of fi rst-time buyers in the UK has increased by 93% in the last decade.

Soaring property prices have not been a major deterrent for purchasers as the introduction of the stamp duty holiday in 2021 saw a surge of buyer activity, causing fi rst-time homeowners to increase by 46% from the previous year, hitting a new high of 410,000 – the highest annual total seen in the last ten years. In the same time period, the price of an average fi rst-time buyer home has increased from £141,572 to £216,826 – representing a 53.2% rise.

A big contributor to the increase in fi rst-time property owners seems to be the ‘Bank of Mum and Dad’.

Prices in the property market are becoming increasingly volatile, as an unbalanced supply and demand level pushes the average asking price to £360,101 – representing a £19,082 increase over the past three months. Buyer enquiries are 65% above the levels of 2019 and 53% of properties are selling at or over their fi nal advertised asking price.

However, overall property sales have started to decrease for the fi rst time since the end of the stamp duty holiday in October 2021. Completed sales in April came to 106,780 – 12% lower than the same period last year, according to HM Revenue & Customs.

The latest decrease in property sales is an indicator that the housing market is starting to cool which would represent an opportunity for fi rst-time buyers. April’s rise in prices is down on the 1.4% increase in March, according to Halifax’s monthly property index. House price growth is expected to continue to slow due to the Bank of England’s decision to raise the Bank Rate to 1%.

David Hannah, Group Chairman at Cornerstone Tax, comments: “The introduction of the stamp duty holiday caused a substantial rise in fi rst-time buyers. It’s inspiring to see that the percentage of fi rst-time homeowners is growing in a challenging landscape. Even though house prices have continued to climb, I think we will inevitably see a slowdown in the property market, but it won’t be as substantial as some people think. If we look at what has been going on – house price growth, retail infl ation, energy costs surging, that’s going to put pressure on employers to raise wages. I believe wages will rise, meaning real spending power will not actually decrease as much. However, if this doesn’t happen at the required rate, the act of renting or purchasing property will become more and more unaff ordable in the UK.

“The problem we do have is the rate of demand and supply. If builders are building and they’re over supplying, it will soften the increase and the appreciation in asset value. But, if the number of people wanting to buy houses continues to exceed the supply, then those prices are going to rise. This is exactly what is happening currently, with just 216,000 new homes being built in 2020/21, falling some way short of the government’s 300,000 a year target.” ctatax.uk.com

The average price of a property in Essex in June 2022 was £440,279, representing a 9.8% increase year on year, while in Su olk the average home was £348,872, an annual rise of 13.8%.

Source: Rightmove

11

News

1 in 10 rented homes could be a bungalow within the next decade

Nearly one in 10 rented homes in the UK could be a bungalow in the next 10 years, research from Paragon Bank (paragonbankinggroup.co.uk) has revealed.

A survey of more than 1,300 tenants in the private rented sector (PRS) showed that currently 3% of people live in a bungalow, but 9% of respondents expect to rent this type of property in 10 to 15 years’ time.

The increase correlates with a forecast increase in older tenants living in rented homes over the same period.

Homes headed by a person over the age of 55 will account for over a quarter of all privately renting households by 2035, analysis conducted on behalf of Paragon Bank by the Social Market Foundation found.

Its report, ‘Where Next for the Private Rented Sector?’, found that 18% of households currently privately renting are headed by somebody aged 55 or over. This will rise to 27% of households by 2035, according to the SMF’s projections. The Government’s English Housing Survey shows there are currently 141,000 bungalows in the PRS in England, representing 3.3% of the total number of rented homes. Buy-to-let lending fi gures show strong growth in the number of bungalows purchased by landlords over the past fi ve years, although they still remain low as a proportion of total properties acquired.

Last year, landlords purchased 3,370 bungalows with a buy-to-let mortgage, compared to 1,844 in 2017.

Another signifi cant shift in property type was semi-detached homes. Currently 20% of tenants said they rent this type of property, with 25% forecasting they will rent semi-detached homes in the future.

Conversely, terraced homes and fl ats are forecast to experience falls. Just under a third (30%) of tenants today live in a terraced home, with 20% saying they expect to rent this type of property in the future. Flats, meanwhile, are currently home to 40% of tenants, with 30% of people saying they expect to be renting this type of home in 10 years. Richard Rowntree, Managing Director of mortgages at Paragon, said: “The evidence suggests that the demographics of private renters is shifting and that the profi le of tenants is getting older. There is a growing proportion of people who will rent property for their entire lives, whilst we have also seen growth in the number of people who have sold property and have gone into rented homes.

“The challenge for landlords is providing the right homes for older tenants. Bungalows are typically regarded as unfashionable, but they off er practical benefi ts for people who may not be as mobile as they once were and certainly have their place in the PRS. We would expect to see an increase in this type of property, as well as homes specifi cally targeting older tenants, over the next 10 to 15 years. Landlords are not yet buying this type of property in scale, but we would expect that to accelerate to match forecast levels of tenant demand for bungalows in future.”