Boydens - Life at Home | Spring 2022 - Issue 02

boydens.co.uk Finances 18 It is always heralded as a sign of a healthy property market if first-time buyers are playing an active role. That was certainly the case in 2021 where, according to Yorkshire Building Society, first-time buyer volumes rose by 35% despite strong price growth. The average price for a first home increased by 9% in the past year – from £199,251 in 2020 to £216,836 in 2021. Despite this, first-time homebuyers in the UK accounted for a record £86.1 billion worth of property market value in 2021, up £27.3 billion from 2020 – according to GetAgent. What was behind the rise? Low borrowing costs and government guarantees for mortgages are likely to have helped many people onto the property ladder during the last year. According to Chris Pargin, of Pargin Financial Solutions, the variety and availability of mortgage products (including the reintroduction of 95% loan to value mortgages) was a key driver in this area. During the pandemic, low deposit mortgages were removed completely from the market with buyers requiring a 25% deposit to be able to move forward. This was just not a realistic prospect for many first-time buyers and so demand dwindled. Thankfully for them, that did not last long, but it did take some time for buyers with a 10% deposit to be able to gain 90% loan to value mortgages again. When the government finally reintroduced 95% loan to value mortgages, many first-time buyers were then in a position with enough savings to be able to reinvigorate their property search. The stamp duty holiday, which ended on 30 September 2021 in England and Northern Ireland, has been credited with helping to fuel a boom in the market. First-time buyers already benefited from stamp duty relief on the first £300,000 of the purchase price, but the additional relief on the value between £300,000 and £500,000 will have led to savings (and reduced borrowing) in many cases, particularly benefiting new buyers in pricier areas such as London and the South-East. Meanwhile, much reduced spending during the national lockdowns meant some would-be first-time buyers were able to save up a larger sum for a deposit far quicker than perhaps they had anticipated. Savings were made on a reduced social life, holidays, commuting and its associated ancillary spending (coffees, sandwiches etc), and some also saved money on rent by moving back home with parents. UK house sales to first-time buyers reached their highest levels for 19 years in 2021 – what is behind this rise, and will it continue? Boydens Marketing & PR Manager Paul Howe explores the issues. ladder GETTING ON THE

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