Where the housing market is concerned, 2017 has so far shown a “steady start”. For first time buyers, early data for this year is indicating greater choice and negotiating power, “providing a window of opportunity”.
A 0.4% monthly rise in the price of property coming to the market has also been indicated by Rightmove statistics. Over the same period last year, a similar growth of 0.5% was recorded. These figures can be compared to November’s 1.1% fall in property price, which led Rightmove to label the market as “resilient”.
Since Boxing Day, there has been an increase in Rightmove traffic of 5%, providing an early indicator that housing demand seems robust.
The current search activity growth is important to note, as that which occurred last year may have largely been skewed following the second-home stamp duty announcement in November 2015.
There is an opportunity for first time buyers to make the most of the market whilst the number of buy-to-let purchasers remain lower than last year.
For the usual first time buyer home, availability is 1.9% higher in comparison to last year, giving this demographic greater choice in their property search. This can be compared to the same period last year where supply dropped by 18%. As buy-to-let purchasers reduced variety for first time buyers, ability to negotiate was similarly limited.
This favoured kind of property for those looking to step onto the housing ladder has however seen the largest monthly and yearly increase in price. The 2.6% monthly growth and the 6.4% yearly growth in homes with two bedrooms or fewer has restrained first time buyer activity and is a partial result of early 2016’s buy-to-let rush.
Commenting on the increased level of choice in the market for first time buyers was Miles Shipside. The director of Rightmove highlighted the opportunity for buyers to negotiate given the larger level of supply.
“Those planning to buy their first home in 2017 have more choice of properties and less competition from other buyers than their counterparts a year ago. It’s a possible learning point for aspiring first-time buyers that a year ago buy-to-let purchasers acted more quickly and closed deals at a faster rate, appearing not to take a Christmas break. Admittedly they had the financial incentive of a deadline to motivate them, but first-time buyers still have time to act and currently have the incentive of stronger negotiating power to try and mitigate the upwards trajectory of property prices.
“Some sellers of first-time-buyer properties may be being over-optimistic with their pricing, giving an opportunity for budget-strapped first-time buyers to negotiate, especially if they act now while there’s still more choice available.”
Brian Murphy commented on the fall in buy-to-let competition for first time buyers. The Head of Lending at Mortgage Advice Bureau mentioned the heightened activity in his own schedule during December may indicate the continued confidence in the market despite post referendum uncertainty. “Going forwards, first time buyers may not find themselves in the position of having to compete with a buy-to-let investor for the same property as has been happening over the last few years, which is reflected in Rightmove’s statistic of a 13.2% year on year decrease in BTL purchases. This is likely to be assisted by the current range of 90% and 95% LTV mortgages available at near record lows, coupled with lenders’ becoming increasingly more flexible in terms of lending criteria.
“Anecdotally, last month was busy across our network with many advisers reporting it was one of their busiest months for home purchase mortgage enquiries, which would potentially suggest a ‘down the line’ uptake of activity that we may well see reflected in January and February’s figures, once released. This potentially indicates that, despite the current uncertain outlook for the UK economy, consumers still feel confident enough to consider moving and putting their hard earned cash into bricks and mortar.”
Taken from Today’s Conveyancer and written by Georgina Owen