For those who may not be aware, we’re currently in the midst of the Lunar New Year, which takes place between 29 January and 12 February, and in 2025, shifts from the Year of the Dragon to the Year of the Snake.
Those born in previous Years of the Snake – 2013, 2001, 1989, 1977, 1965, 1953, etc – are said to be mysterious, passionate, wise, enthusiastic and sensitive, which might also be deemed some of the key characteristics of a first-time buyer in today’s housing market. Or, indeed, those of their advisers?
Whatever the nature of your first-time buyer clients’ characteristics, all are likely to be both incredibly enthusiastic and somewhat sensitive about their chances of completing their transaction, especially if they are trying to do so before the end of March.
First-time buyers on the move
From the latest statistics out of Reallymoving, it would appear there are plenty who have been trying to do so in recent months.
Indeed, according to its figures – based on conveyancing quote requests – first-time buyer activity has hit a high in recent months, accounting for 64% of all homemover activity in December and not much lower – 63% – in January.
How the housing landscape is set to shift
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This, of course, isn’t unexpected, given the government’s decision to stick with the change back to the stamp duty thresholds this year. We know that stamp duty shifts often act as a considerable catalyst for activity, and first-time buyers – who might recognise and need the savings available more than most – are clearly doing all they can in order to beat the deadline.
Preventing a decline in first-time buyer interest
One of the big questions now is to what extent we will see any sizeable drop-off in first-time buyer activity when the stamp duty shifts back to its previous thresholds, which will clearly cost certain purchasers more in tax.
Will the year be split between a pre-stamp duty change market and a post-change one? Of course, one wonders if the government has been trying to pre-empt a slight shift downwards in activity by asking our regulator to look at the ways and means by which it might continue to improve mortgage activity, accessibility and affordability for first-timers.
If increased stamp duty is going to result in a downward shift in first-time buyer transaction numbers, then it perhaps wants to open up the market even further to those who have previously not even made it past the ‘getting a mortgage’ stage of wanting to purchase a first home.
That would certainly be preferable in my eyes, and while I can understand a slight reticence on the part of regulators, the economic argument for doing so is, I think, strong, especially given how far on we are now on from those post-credit crunch days, and the fact the affordability barrier for would-be purchasers is arguably higher than it has ever been.
Add in the still very high level of house prices, the cost of living that impacts the ability to save for a deposit, the cost of renting while doing so, plus the need to rely far too much on a Bank of Mum and Dad – not forgetting the supply-side issues – and you can see why, added all together, it still makes it incredibly difficult to make that first purchase.
More access to lending
Relaxing the stress tests and allowing lenders to lend more of their funds to those at higher loan-to-income (LTI) levels does not solve all of these problems, of course, but it will certainly open up the mortgage options for a large number. Plus, it should help develop further mortgage market competition in the first-time buyer space – currently being sat on because of these embedded rules and regulations.
To its credit, the government appears to be recognising how this is holding back a number of would-be first-time buyers, plus it also recognises the economic growth that can be generated by upping the number of property transactions, which should have a significant impact on GDP.
This improvement in activity is up for grabs; we now need the regulator to allow the sector to grab it. How wise and enthusiastic will it be in the Year of the Snake to deliver what the government – and, I suspect, what the market – wants?
We currently wait to see – let’s hope we don’t have to wait too much longer.
