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Is now a good time to get onto the property ladder?


As the housing market reopens, here's what you need to know

Helen Coffey  @LenniCoffey 

After being stagnant for two months, the housing market has finally been given the green light from the government to reopen, albeit with new rules in place to help slow the spread of coronavirus.

As part of the first stage of easing lockdown restrictions announced by prime minister Boris Johnson earlier this week, people in England are now permitted to buy, sell or rent a property, and even attend a house viewing.

There has been speculation that after such a long pause, now could be the ideal time for first-time buyers to bag a bargain. But is it really the best time to purchase your first home? Here’s everything you need to know.

Have house prices fallen?

It’s tricky to say, according to experts. Anthony Codling, housing market analyst and CEO of online property platform Twindig, says the latest data shows that prices are still rising – “but that data is from April 2020. With transactions drying up there is little data to go on.”

House prices were going up prior to lockdown; when the market closed, house prices did not change as there were no sales. The Office for National Statistics has even temporarily suspended its UK house price index until further notice due to a lack of available data.

Will they fall in future?

Possibly, but not necessarily – it’s a complex picture. There has been an unusually wide range of speculation from the industry on the topic: the Centre for Economics and Business Research predicts that 2020 prices will be down by 13 per cent “as a lack of transactions, high uncertainty and falling incomes take their toll”, while a third of valuation surveyors are forecasting price drops of just 4 per cent or less.

What are the new lockdown rules about buying

Knight Frank is predicting a fall of 7 per cent; Savills is looking at a short-term decrease of 5-10 per cent, although it believes the market will have bounced back completely by 2022.

“Our view is that as the market reopens in the next two months, the 5 per cent fall in values we have seen since late March will be revealed in achieved pricing – and while there could be some further downward pressure through to the summer it is likely to be limited,” said Knight Frank.

Mr Codling adds that, although he predicts house prices are likely to fall as we approach a recession, there are other factors at play too, such as supply and demand.

House moves can be divided into those that are necessary – for example, a family is having another baby, a couple is getting divorced, an elderly person needs to move into a care home – and those that are discretionary – ie, you don’t need to move but you would like to, for instance to have more outdoor space. Twindig estimates that half of home moves are the latter; these types of move tend to drop off a cliff in times of uncertainty, resulting in fewer houses on the market and a potential stabilising of prices.

“With more than 25 per cent of the country’s workforce on furlough and a recession just around the corner, the fear of unemployment is rising and rising fast. The simple fact is that people do not choose to move if they are worried about losing their job.”’s Russell Quirk, meanwhile, does not predict too much of an impact on prices overall: “Property prices will not, in my opinion, now drop as a consequence of Covid uncertainty or anxiety. Demand is too strong and market fundamentals that drive demand remain robust.”

Is now a good time to buy for first-timers?
In some circumstances, yes. While homeowners may decide not to sell their property due to Covid-uncertainty, housebuilders do not have the same option to hold off on sales.

“During the credit crunch, the housebuilders doubled their market share in the housing market,” says Mr Codling. “Housebuilders are also much more pragmatic on price than homeowners because they have to sell and are not as emotionally attached to the homes they are selling.

“Many housebuilders also have accounting periods ending on 30 June 2020 and will be looking to meet sales targets – this provides the first-time buyer a great opportunity to negotiate an attractive lower price.”

When buying a new build, first-time buyers can also benefit from the government’s Help to Buy scheme, which removes the need for a large deposit, plus they benefit from brand new fixtures and a 10-year warranty.

Mr Quirk agrees that there are opportunities for buyers out there: “For those sellers that are wobbling at this time, especially buy-to-let landlords that have been consistently kicked by government policy in recent years, there might be a deal to be had if first time buyers act quickly.”

What are the downsides?

“Mortgage lenders get nervous when there are growing signals of house price falls and, while we are in a Covid crunch not a credit crunch, we expect to see a reduction in the availability of high loan to value mortgages,” says Mr Codling.

The result? First-time buyers will need a bigger deposit – for those without access to the Bank of Mum and Dad, it may prove challenging to build up enough cash to gain a toehold on the property ladder.

But those who can afford to purchase now could reap the rewards. He adds: “Ironically, if you do have a deposit, you may well find that the monthly mortgage payments are lower than the rent you are currently paying.”

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