According to its latest survey, first-time buyers accounted for 36% of the market in February, a significant jump from 28% in the same month last year. First-time buyers have not accounted for such a large chunk of the market since July 2011.
It follows data from Savills last week which found that first-time buyer numbers in the second half of last year were equal to the numbers of home movers, the first time this has happened since the 1990s.
Connells said that current circumstances presented an “ideal opportunity” for first-time buyers to take their first step onto the housing ladder, pointing to a combination of cheap mortgage rates and the stamp duty surcharge now faced by landlords.
However, John Bagshaw, corporate services director at the firm, said it would be a mistake to read this as a sign of prospects improving for first-time buyers over the long-term, noting that over the last decade first-time buyers have been responsible for an average of 35% of the market.
He continued: “Less competition for today’s first-time buyers comes at the expense of tomorrow’s. Most people rent as they save for a deposit, but the steady investment into the rental market is running dry. With limited new homes being built for the private rental sector, rents will soon start to rise. This will devour tenants’ disposable income which would otherwise have been saved for a deposit. The problem will be exacerbated next month as mortgage tax relief is removed, forcing more landlords to exit the market or ramp up rents.
“Most aspiring home owners will tell you about the Herculean challenges they face to save for a deposit. Despite all the Help to Buy programmes, first-time buyer activity is only 1% higher than it has been, on average, over the last decade. We may be in the eye of the storm in Britain’s housing market – a brief period of calm before the turbulence begins again. The base rate can’t stay on the floor forever. With Brexit approaching, economic conditions may get tougher. First-time buyers may need to board the ladder now before it’s hoisted up again.”
Landlords had a wretched February, with the purchase market falling to a new low in February. Indeed, they almost halved compared to last February, though Connells noted that last year’s figure was boosted by the rush of landlords attempting to avoid the stamp duty surcharge.