Prime time for first-time buyers: Why the stamp duty cool off is the best time to make a purchase

With recent research revealing that 40% of first-time buyers plan to purchase their new home in the next 3-6 months, the property market cool-down is instead providing a renewed opportunity for first-time buyers to get their foot on the ladder.

Related topics:  Property
Trevor Stunden - Kettel
13th September 2021
FTB 77

The stamp duty holiday has heightened demand like never before, encouraging homeowners to push their home move plans forward and roll the gains they’ve made on their current home into a new property. In turn, it has also created a steep price hike for first-time buyers, pricing them out of a market they would have otherwise been able to afford 12 months earlier. However, now is the time where that’s all about to change, with prices levelling off or coming down and greater support for first-time buyers available, this presents an opportunity for first-time buyers to re-enter the market.

Impact of the stamp duty holiday

While the stamp duty holiday provided much-needed support to keep the housing market moving during the pandemic, the unintended impact was the freezing out of first-time buyers due to rapidly rising prices. As first time buyers don’t benefit from selling their current home for a premium, the knock-on effect is that they have really struggled to compete against house movers who have bid up on properties (due to perceived savings).

Currently, FTBs already receive stamp duty relief on the first £300k for any properties under £500k. Based on our research, the average price that FTBs are able to afford is £217k meaning any additional stamp duty relief had limited impact. Due to this, 54% of buyers decided to put their search on hold until the market cooled down significantly. However, it’s not all bad news. This has provided a chance for 58% to save a larger deposit and weigh up their options. With the uncertainty of a post-pandemic work schedule, 77% of FTBs still rate transport links just as important as they did prior to the pandemic.

Buying a property in today’s market

With the largest portion of the stamp duty holiday coming to an end in June and the last trench ending at the end of September, we’re now seeing renewed interest in first-time buyers looking to make a purchase. In order to make informed decisions around where, how and what to buy, technology is also providing a helping hand to many first time buyers that need professional advice and assistance.

With many first time buyers foxed by property jargon, it’s important that those looking to make such a big decision are well informed with all of the tools and information they need. While there’s a lot of information online, about everything from mortgages to legal advice, new technology is combining all of the stages of the home buying experience into one user-friendly process. Not only does it save first time buyers time and money by helping to find them the right home, in the right area, at the right budget, but it caters for the fact that first-time buyers have unique requirements that don’t apply to home movers. Historically neglected by the industry due to their perceived lack of value and level of hand-holding required, it’s about time that we all help first time buyers to take control of their property purchases.

Looking ahead in 2021 and beyond

While the pandemic has resulted in a tumultuous period of change for the property market, we believe we will now see the frenzy calm down and the market cooling off a little, giving first-time buyers a chance to look past the uncertainty of the pandemic and provide an opportunity to find their ideal first home.

As the demand from home movers subsides post stamp duty holiday and an expected 25% decline in supply materialises, prices will start to level off in the next 3-6 months. This presents a window of opportunity for first-time buyers who have saved an extra 12-18 months worth of deposit as a stepping stone onto the property ladder before we expect the market to heat back up again in the back half of 2022.

The process of finding your home can be stressful and time-consuming and many first time buyers are also ill-informed about the technicalities of buying property. It’s not something we teach in school. A single platform dedicated to helping first-time buyers discover, finance and complete their home purchases, we now have a chance to equip homebuyers with the personalised knowledge and understanding that they need to make the best decision for them. It’s time to empower the next generation of homeowners.

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