A report from property portal Zoopla predicts that movers will be more likely to purchase a house than first-time buyers in the UK.
Zoopla mentioned that while first-time buyers comprise the highest proportion of sales in the UK for over a year, the squeeze on mortgage lending and increased interest from movers will shift this trend this year and in 2021.
Expected change in UK housing market conditions
According to the report, the coronavirus pandemic has changed the landscape of UK housing. The lockdown made people reconsider their domestic arrangements, especially for those who spent more time working from home.
Potential buyers are now considering gardens and space, as well as proximity of family, at the top of their priorities when looking for a home. This led to existing homeowners to search for an alternative property.
Zoopla said this would result to home movers becoming more likely buyers at the end of this year and next year, compared to first-time buyers.
Moreover, Zoopla researchers found that demand from first-time buyers was already falling after the post-lockdown peak while demand from movers was "holding steady" at 37% higher than before the coronavirus pandemic.
Richard Donnell, research and insight director at Zoopla, said: "First-time buyers have been a driving force of housing sales over the last decade."
"They remain a key buyer group but lower availability of higher loan to value mortgages and increased movement by existing homeowners means a shift in the mix of home buyers into 2021," Donnell added.
Tougher market for first-time buyers
A report by the Resolution Foundation suggested that the UK property market would be more difficult for first-time buyers despite forecasts of falling house prices.
The Resolution Foundation report indicates that first-time buyers could find the UK property market increasingly “out of reach” despite predictions of a decline in house prices following lockdown.
Results from a survey of agents show that a medium-term downturn in the housing market is expected following a short-lived boom after lockdown.
House price falls are usually perceived as a chance for property to become more affordable for first-time buyers. The Resolution Foundation’s Housing Outlook report says that some young people in stable jobs, with savings, and who have had the chance to put more aside in lockdown will benefit.
However, the report identified four major obstacles the typical first-time buyer must face in the UK property market.
The first one is that lenders will be requiring a larger deposit to protect themselves against borrowers being unable to repay. This is because typically, first-time buyers aged around 30 and saving 5% of their income, will need to save for more than 20 years to pay for it.
Another factor is that saving would be more difficult to do as some people have either had to cut or use some of their savings during lockdown due, in part, to lower incomes.
The third obstacle is the government’s stamp duty holiday in England and Northern Ireland, which removes the advantage first-time buyers have over movers.
Lastly, the need to transfer residence will be more expensive as young workers may find the need to relocate, which would lead to additional travel costs that could eat up a portion of their savings. On the other hand, moving to the city for work is likely to mean higher housing costs.
US buyers looking for bigger houses
Meanwhile, in the US, people are looking for bigger houses as they seek space to live and work during the pandemic, based on a report from brokerage firm Redfin.
Homebuyers are searching for bigger houses in July, when sales rose by 21.2% year-over-year nationwide, compared with 10% for medium-sized homes and 2.3% for small homes.
