Brexit to offer boost for first-time buyers?
The UK’s vote to the European Union may give a boost to first-time buyers attempting to get on the housing ladder.
Housing market activity shifted in favour of both first-time buyers and re mortgagors, according to the latest research from Connells Survey and Valuation.
The first full month after Britain’s historic vote to leave the EU, July saw the number of all property valuations fall 2 per cent year-on-year.
John Bagshaw, corporate services director of Connells Survey & Valuation, comments: “Judging the Brexit effect might take years – but in the mean time the first full month after the vote already looks encouraging. Change has mainly been confined to the mixture of activity, rather than the overall volume of valuations. Any clouds of uncertainty are showing their silver lining for first-time buyers if anything dealt an advantage as some other buyers paused for thought in the weeks immediately after the result. If longer-term economic issues are on the horizon, first-time buyers aren’t feeling the effects yet.”
Activity in the first-time buyer and remortgaging sectors drove July’s valuation market. There were 12 percent more first-time buyer valuations in July 2016 than in July 2015. (Remortgaging activity also saw the same annual rate of growth.)
Bagshaw continues: “First-time buyers are continuing to make the most of government schemes and are now boosted by even lower mortgage rates this summer. This is the same development that is proving a boost for re mortgagors, also benefitting from a new wave of even better mortgage deals.”
The figures are backed up by new data from the Council of Mortgage Lenders, which found that first-time buyers borrowed £5.5bn in June 2016, up 28 percent on May and 25 per cent on June last year. This equated to 34,300 loans, up 24 percent month-on-month and 17 percent year-on-year.
Richard Connolly, Chief Executive Officer at Rent plus, comments: “It’s reassuring to see an increase in first-time buyers in June, confirming that more young Britons are realising their dream of homeownership. However, homes unfortunately still remain unaffordable for many, with house prices rising faster than wages during the year. First-time buyers are therefore having to increase their borrowing even further, just to get a foothold on the property ladder. Despite low-interest rates and other incentives, homeownership remains out of reach for many; with rents continuing to rise, this further hinders progress on savings for a deposit.”
“With the changing economic climate after the EU referendum, the challenge of increasing homeownership may now steepen,” he adds. “While low-interest rates may make obtaining mortgages more affordable, there could further hurdles such as potential slowdowns in employment or construction making it more difficult to buy a home. To give first-time buyers a boost, the government needs to implement a range of mixed tenure options to help improve access to housing.”