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First time buyers from the real estate market frozen


Existing homeowners are overtaking first-time buyers as the largest source of demand in the property market

  • Moving company demand grew 48% in the first quarter. from first-time buyers 11%
  • First-time visitors will account for 34% of the mortgage market in 2020, while movers will account for 35%.
  • High equity existing owners seeking more space and less availability of higher mortgage lending value are driving the trend

Existing homeowners have overtaken first-time buyers as the largest source of demand in the property market.

Online real estate agent Zoopla said the change was due to the coronavirus pandemic as younger families were increasingly excluded from lenders.

Zoopla's most recent property price index found that demand from homeowners looking to move increased 48 percent in the first three months of this year.

Changed landscape: Zoopla's latest property price index found that demand from homeowners looking to move rose 48 percent in the first three months of this year

Demand from first-time buyers rose 11 percent – the first time since 2017 that first-time buyers weren't the biggest driver.

It is because, in recent months, many low-deposit mortgages have disappeared from the market as lenders have become more cautious about “riskier” loans.

Lenders are now so careful about lending to first-time buyers with as little as 10 percent down payment that they are restricting this type of lending to one-day fire sales.

Zoopla calculated that first-time homeowners with a mortgage will make up nearly 34 percent of the market this year, while existing homeowners with a mortgage will make up around 35 percent.

The trend is expected to continue through 2021. First-time buyers account for 32 percent of sales and homeowners with a mortgage account for 36 percent.

In 2019, first-time home buyers on a mortgage accounted for 35 percent of sales, while homeowners with a mortgage accounted for 34 percent.

Trend reversal: The table shows that demand from homeowners this year has exceeded that of first-time buyers

Trend reversal: The table shows that demand from homeowners this year has exceeded that of first-time buyers

Richard Donnell, director of research and insight at Zoopla, said existing homeowners' search for more space, sparked in many cases by the Covid-19 crisis, is fueling the trend.

Donnell said, “A change in the mix of buyers is helping market conditions with continued demand from high-equity existing owners looking for more space and relocation.

& # 39; In contrast, demand for first-time buyers is weakening. First-time buyers have been a driving force behind selling residential property over the past decade.

"They remain an important group of buyers, but reduced availability of higher mortgage lending value and increased movement by existing homeowners means a shift in the mix of home buyers by 2021."

In September, demand from first-time home owners and existing homeowners were the most diverse in the South East, Scotland and South West compared to the first quarter of this year

In September, demand from first-time home owners and existing homeowners were the most diverse in the South East, Scotland and South West compared to the first quarter of this year

Lenders are likely to be more cautious about who they lend to when watching how the economy performs and what happens to house prices over the next 12 months, considering how many people are losing their jobs and how long vacation is ending October.

While the real estate market is currently experiencing a mini-boom, many experts and economists don't expect the price hike to continue into next year as the stamp tax vacation ends and job losses continue to rise.

Real estate price growth will stall next year

The Hamptons regional price predictions for 2020 and 2021

– Greater London, 2.5%, -1.0%

– Prime Central London, 1.0% -1.0%

– Southeast, 1.5%, 0.5%

– East England, 1.0%, 1.0%

– Southwest, 2.0%, -1.0%

– East Midlands, 1.5%, -0.5%

– West Midlands, 1.0%, -1.5%

– Northeast, 1.5%, 1.0%

– Northwest, 2.5%, 0.5%

– Yorkshire and the Humber, 2.5%, 1.0%

– Wales, 3.0%, 1.0%

– Scotland, 1.5%, 0%

Real estate agent Hamptons International predicts that property price growth will stall across the UK over the next year.

This is a more optimistic forecast than the economists at the Center for Economic and Business Research, who recently forecast that prices will fall nearly 14 percent over the next year.

However, the Hamptons forecast for zero growth in 2021 is based on the assumption that a trade deal will be reached with the EU and a coronavirus vaccine will be available in the first half of next year without a full second lockdown.

The property market has rebounded rapidly since the lockdown, according to the Hamptons, and expects prices to have risen 2 percent for the full year.

Wales will see the strongest house price growth this year at 3 percent, followed by London, Yorkshire and the Humber, and North West England each with 2.5 percent.

However, the economic consequences of Covid-19 will mainly be felt in 2021. By then there should have been some economic recovery

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