The return of the first time buyer?
this may sound like a Hollywood blockbuster, the return of
the first time buyer to the property market could well take
place in 2016.
First of all, let’s turn to market predictions for the coming 12 months. If you Google ‘property price predictions’ you will come up with acres of posts. The truth is, nobody really knows what the property market will do in the next 12 months. At best, these are educated guesses.
The property market depends on a number of things: economic circumstances, elections, feel-good factor, confidence. With an impending EU referendum on 23 June, who’s to say that the property market may not stall while we await the outcome?
If we exit Europe, will the property market suffer, or will we simply take a breath and recover?
My best guess (and it is a guess, despite over 30 years’ experience in the property market) is that with stable, low interest rates and confidence high, the property market will remain on an even keel. We will see a slight increase in property prices but not as great as we did last year, which in some parts of our region was up to 15%. The property market really can’t deal with another 15% price increase – it would, in my humble opinion, create a ‘bubble’, which is dangerous.
Now, let’s turn to the return of the first time buyer, which Right Move recently wrote about. What makes me believe that we will see more first time buyers in 2016? Well, it’s already started. Why?
First of all, the buy-to-let investors are easing out of the property market. George Osborne has clamped down on them and there is a link to an excellent Q and A by Zoopla below. Buy-to-let investors are fully aware of the impending tax implications and most of them have already ‘filled their boots’. So though they will continue to buy, it won’t be in great numbers.
However, in anticipation of a last minute demand by buy-to-let investors, a good deal of stock has come to the market, particularly the smaller one and two-bedroom properties.
Who else does this type of property attract? Of course, traditionally, this was where first time buyers started their journey up the property ladder. Now, first time buyers have been keeping a careful eye on such sites as Rightmove and Zoopla (both of which we feature on strongly) and are aware of this increase in stock.
With increased supply and demand, properties remain fairly stable. This is good news for all of us. First of all, we have young people owning their own home with all the responsibility that goes with it, giving them an incentive to climb the property ladder in the future.
This will also free up property further up the chain. As these first time buyer properties are re-sold within the next one to two years, more first time buyers will enter.
Although buy-to-let investors have provided valuable rental stock, they don’t generally sell their properties for at least 10 years. Some may even pass from generation to generation.
So, in a nutshell, I believe first time buyers will be returning to the market. They will have choice; they will start freeing up the property market and we may get back to a slightly more normal property market.
Buy-to-let investment is still very much a part of our market, but we may see it in a different form – crowd funding, friends forming companies – it could get far more professional.
That’s all from me until the spring. We’re looking for the clocks to go forward and those longer evenings, so we can get out and show you the house of your dreams!