Will It Ever Get Better For First-Time Buyers:

Getting on the housing ladder has never been easy. But, it’s fair to say that Covid-19 has made it practically impossible over the past year. It’s hardly surprising. Tens of thousands of people have lost their jobs, and businesses across the country have struggled to stay afloat. Uncertainty has been rife, and, at times, there has seemed to be no end in sight.

The good news is that for now, at least, the forecasts for economic recovery are optimistic. It is currently believed that it will be back to pre-Covid levels by the third quarter of next year. That is, of course, assuming that we won’t go through a third wave until next winter. 

With all of the uncertainty, you’d be forgiven for thinking that house prices would have declined last year. If ever there was a time when first-time buyers stood a chance of getting on the housing ladder, surely the deepest recession for 300 years would go in their favour? Yet, sadly the opposite has been true.

In fact, Nationwide’s House Price Index for March revealed an increase in house prices. They were up 5.7% on a year-by-year basis, with the average house in the UK now costing a staggering £232,134. Despite the numerous lockdowns, house prices were still rising.


Repercussion for those getting on the housing ladder

For first time buyers, the continued hike in house prices must have come as a real blow. Many who had been ardently saving have found the rug pulled from beneath them just before the final goalpost. Compounded by the fact that young people are the demographic most widely affected by Covid on the jobs front, to say it’s come as a double whammy is a bit of an understatement.


So, is the situation for those getting on the housing ladder likely to improve any time soon?

It’s not all gloom – there is some room for optimism! The Chancellor’s stamp duty holiday expires on September 30th. And because of that, the Office for Budget Responsibility expects house prices to fall by 1.7% next year. [See Report].

Whether or not this will transpire is hard to tell. There are those who believe that the housing market stood up so well to the pandemic that it will invariably do even better as the economy starts to recover.

There are also regional factors to take into account. Lockdown forced many people to reassess their lives and where they want to live. Throw into the mix the new onus on working from home, and people are no longer confined by needing to live close to their place of work. The BBC recently reported an ‘explosion’ in demand for property on England’s south coast and along the Welsh coastline. First time buyers in these areas are likely to face new competition from people buying second homes or relocating from cities and downsizing. 

So, what help is there for those getting on the housing ladder for the first time? The government continues to push new initiatives designed to help first-time buyers. In the March Budget, the Chancellor announced the new mortgage guarantee scheme that will see government backing for 95% loans on both new builds and existing homes. But as the economy recovers, it remains likely that first-time buyers will need further help still in order to find a foot on that all elusive housing ladder. 



Are you concerned about getting on the housing ladder? Perhaps you are looking to help your loved ones finally get a foothold? Either way, we can help! So, if you think some financial advice might be helpful, do remember us – we’re only a phone call away!

Written by Steve Burns

Steve is a chartered financial planner who has been with Lewis Brownlee for over 20 years, who now heads up Lewis Brownlee Financial Services. Under his directorship, the firm has established itself as a specialist provider of professional, informed and impartial advice.

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