According to recent research, January saw a surge in people trying to get onto the housing ladder.
The data from Connells Survey & Valuation indicated that first-time buyer valuations grew by an annual 21% during the first month of 2017, largely driven by a rise in weekly earnings and high employment levels.
The figures also show that first-time buyer contribution to housing market activity has grown, rising from 25% at the beginning of 2016 to 34% at the start of this year.
Commenting on the figures was John Bagshaw. The corporate services director of Connells Survey & Valuation highlighted the favourable climate for first-time buyers as well as the recorded mortgage levels in January.
“With UK employment close to its eleven year high and weekly earnings rising by 3% (ONS data), many first-time buyers are fitter financially than they were a year ago. Aided by cheap mortgages rates, aspiring home owners have seized the opportunity to get their first foot on the ladder. The demand for homes has been particularly high in January, with the Connells Group estate agency network, for instance, seeing nearly 12 applicants per each new instruction that comes onto the market.”
Mr Bagshaw also drew attention to the importance of first-time buyers to the market as well as the need for the government to deliver on their proposals in relation to housing supply.
“As a proportion of the overall valuations, first-time buyers are now even more important to the health of the market – making up a third of activity. It will be reassuring for the Government to know that their policies to boost demand from first-time buyers are bearing fruit.
“However, more work is still required to ensure the supply side of the housing market is fit for purpose. First-time buyers tend to be younger couples, keen to start families, so need to be able to move up the rungs on the property ladder easily. The policies to ensure the right homes are built in the right places within the new White Paper should help boost the supply of family homes, but the Government must also deliver on their pledges to build homes faster to ensure a healthy housing sector over the next few years.”
Where people who were selling property were concerned, the number of valuations grew in the first month of 2017 by 10% in comparison to January 2016.
However, although both the first-time buyer and sales market saw valuations rise, investment from landlords fell by an annual 63%.
This decline may partially stem from the rise in buy-to-let purchases made in January 2016, as the stamp duty changes encouraged landlords to bring the purchases forward. However, in comparison with the first month of 2015, landlord investment is still very low.
Mr Bagshaw also commented on the recent housing White Paper, highlighting a key proposal in relation to tenant support as well as changes within the rental market on the whole.
“The new White Paper’s aim of helping tenants through supporting the build to rent sector could be rendered ineffective with this recent drop in investment from private landlords. While a potential increase in build to rent homes will take some years to filter through, the slowdown in buy-to-let purchases will soon start to bite, with fewer rental properties coming onto the lettings market. This shortage of supply could fuel competition from tenants with the potential to push up rents.
“There is a serious risk that the Government’s attempt to increase the number of affordable homes to rent will also be overshadowed by the impact of George Osborne’s taxation policies aimed at private landlords. As the Government’s definition of ‘affordable’ is linked to the market averages, rather than tenant incomes, rising rents could mean new ‘affordable homes’ are out of reach for those just about managing.”
