As of the beginning of 2022, the number of first time buyers has been estimated to sail past the 400,000 mark – the highest it has been since before 2008 and the global financial crisis.
In the face of so many uncertainties implanted from the third lockdown of early 2021, the wealth of first-time buyer transactions reached the highs of 408,379 in a year where there was a 35 per cent increase over 2020. Today, first-time buyers make up 30 per cent of all house purchases with a mortgage – up from 36 per cent in 2007.
You would have to travel back 15 years to see transactions at this level, with 2006 being the previous buyer peak where 400,900 jumped onto the first step of the housing ladder. When the financial crisis of 2008 occurred, the numbers hovered around half of the current amount at 200,000.
Today, the falling unemployment numbers, low borrowing costs and low deposit mortgage deals are driving the demand for the first-time buyer crowd. These buyers have also not been deterred by the price of their first home either, which has increased by 9% in this past year. The huge benefit of being able to increase their deposits through the stamp duty holiday and sudden drop in expenditure during lockdowns has kept them focused and driven over the past year.
First-time buyers are typically in the high-income groups who have had a significant benefit on their financial standing during Covid-19 restrictions, making 60% of first-time buyers among the top 40% of the income distribution.
Demand Over Supply
In the near-term, housing demand is going to continue to exceed supply. The expectation now is that prices elevating in comparison to local earnings will see a dampening of activity. This is expected to see first-time buyers be among the first to taper off with interest.
With many first-time buyers focusing their efforts to buy property in Stockport and more rural areas away from city living, looking for the perfect home to start building towards family life – it is unlikely that first-time activity numbers will continue to stay at the 2021 levels and 2022 will see a more concentrated effort from those homeowners looking to sell up and move onwards.
As with anything, uncertainty plays a huge shadow over everything to do with the economy. Different variants of the coronavirus are always going to play a big part in fluctuation and demand, with home viewings potentially scuppered if a more serious state of lockdown is reintroduced.
Whilst this may feel even more pent up demand, it may also scupper the desire for people to move out of their surroundings in a time of crisis – meaning things could slow considerably more.