In recent years, there has been a spate of initiatives to help first-time buyers get on the property ladder, from Help to Buy to Stamp Duty exemptions. And by and large these measures have had the desired effect: demand from first-time buyers seems to be getting stronger all the time. The latest figures from trade body UK Finance show first-time purchases up nearly six per cent year on year.
It seems paradoxical then to read, side by side with that, tales of woe about new developments that are struggling to sell. There is a strong tendency to associate new-build with first-time buyers so if there is plenty of demand from this source, new flats and houses should be flying off the shelves.
Yet according to the Federation of Master Builders (FMB), consumer demand for new build homes has dropped to a six-year low, with the organisation's House Builders' Survey revealing that small house builders are reporting buyer demand at a score of 2.9 out of five – down from 3.14 last year and expected to fall to 2.75 in 2020.
Developers themselves are perhaps unwittingly contributing to this: a lot of new-build marketing is pitched at ‘young professional couples’ who are also quite often first-time buyers. It may be that this is inadvertently putting off a swathe of potentially eager customers who already have a foot on the housing ladder. It is important to remember that for all the recent strength of first-time buyer demand they still represent less than half the total new mortgage market.
In reality, there are many different types of household who may want to live in a new-build property. It is a nice feeling to move into a new home knowing that everything has been built to a high specification, and has never been used before so there is no wear and tear. And then there is the improved energy efficiency compared to older homes, meaning it is easier (and cheaper) to keep warm in winter – something that arguably gets more important as we go through life!
Of course, as things stand, home-movers will lack the advantages of first-time buyers in terms of incentives being offered to them, so developers may need to be a bit more creative to appeal to this demographic.
Most prospective home-movers will need to sell their existing home in order to finance the purchase of a new one. Part-exchange and assisted move schemes take a lot of the stress and hard work out of selling from a customer’s perspective, while also giving developers peace of mind that the chain isn’t going to break down and that the transaction is being managed and progressed in a timely fashion – at Spicerhaart Part-Exchange & Assisted Move, we aim for contracts to be exchanged within 28 days, enabling the customer to buy their new home.
With Help to Buy set to be withdrawn in 2023 – and no current plans to replace it – there is a risk that some of the wind may begin to go out of the sails of the first-time buyer market, but in any case it surely makes sense for developers to extend the appeal of their properties to as wide a cross-section of the market as possible.