The market is changing in favour of first-time buyers. Could this be the perfect season to snap up a home? Sharon Dale reports
Prices are subdued, buy-to-let activity is waning, there are more properties on the market and smaller homes are taking longer to sell, according to the latest report from Rightmove.
These factors combine to make autumn a good hunting season for first-time buyers.
Those looking to climb on to the property ladder could find themselves in a prime position to buy a starter home.
Rightmove statistics reveal that the average asking price of property coming to market has risen by a relatively muted one per cent this month, the lowest monthly rate of increase at this time of year since 2010.
The slowest area of the market is homes with two bedrooms or fewer. They have suffered a 0.1 per cent monthly price fall and are also taking longer to sell with a year-on-year increase in average number of days on the market up from 55 days to 58.
This, say Rightmove, is a result of less buy-to-let investor activity. Cash-rich investors, who regularly compete against first-time buyers and often win, are beginning to pull back thanks to punitive tax changes.
Mortgage approvals for new buy-to-let purchases are down by 14 per cent compared to a year ago and down by 53 per cent compared to three years ago.
New figures from Hamptons International show that the number of homes in Yorkshire bought by landlords in the first half of this year is down by 17 per cent compared to the same time last year.
Miles Shipside, Rightmove director and housing market analyst, says: “With the government using the tax system to try and help first-time buyers while deterring out-of-favour landlords, prices in this sector have been subdued as intended. That gives aspiring first-time buyers an autumn opportunity to negotiate a favourable deal.”
Rightmove say that stretched buyer affordability and a slowdown in price rises are the natural outcome of property prices increasing over the past seven years at a faster pace than average wages.
Shipside adds: “Landlords are clearly buying far fewer properties and that leaves a gap in the market for first-time buyers. While landlords were hit with a three per cent stamp duty surcharge on property purchases back in April 2016, in contrast most first-time buyers were effectively awarded stamp-duty-free status in November 2017. The fall in prices at the bottom of the market during what is a traditional busier time means that those keen to sell need to price accordingly, which gives an opportunity for those stamp-duty-free first-time buyers to negotiate harder.”
Mark Manning, of Yorkshire-based Manning Stainton estate agents, says that average selling prices always tend to fall slightly at the back end of the year but agrees that there is a greater volume of reduced property this year.
While buy-to-let investors are still active in the north, where prices are lower, he says that investor activity is calming and first-time buyer demand is high, due, in part, to low mortgage rates.
First-time buyers can now get a two-year fixed rate mortgage with under two per cent interest.
He adds: “Buyers and sellers are starting to talk about Brexit a lot more recently and we’ve seen a 6.5 per cent increase in the number of new properties being listed over the past three months. I think this is because people are looking to move before the potential impact of Brexit hits. There’s a similar feeling in the air surrounding Brexit to that we see in the lead up to a General Election, so I think we’ll see a flurry of activity over the next few months, followed by a lull in February and March as people put off buying and selling until the effect of Brexit on the market becomes clearer.”
Home.co.uk’s October Asking Price Index predicts that price cutting is becoming the new norm as the market adapts to reduced demand.
While Yorkshire asking prices rose by 1.1 per cent in October and by 4.5 per cent year-on-year, Doug Shephard, of Home.co.uk, says that the region is enjoying the tail end of a boom and will soon join other areas of the country in negative growth.
There are also predictions that Brexit, especially a no-deal Brexit, could have a negative impact on values, though Mark Manning believes that the effect, if any, will be minimal in Yorkshire.
He says: “If prices do fall due to Brexit, it will be in the south. I think the market there will be in for a rough time but I am not convinced that we will see any big changes here. We may see prices fall a little here and there but there won’t be any massive reductions.”
Mark’s advice to concerned would-be first-time buyers is: “Don’t put your life on hold. If I was a first-time buyer and I felt my job was going to be secure post-Brexit, I wouldn’t hesitate to buy is I really wanted a home of my own.
“After the property crash happened in 2008 we had people waiting and waiting to buy because they thought prices would fall by 50 per cent here but they didn’t and they were the ones who got caught out in the end.”