First-time buyers do not take advantage of house price fall

Feb 25, 2020
Stephen is one of the firm’s tax partners. He specialises in income tax, capital gains tax, corporation tax, inheritance tax, and stamp duty land tax. He also specialises in advising property and construction businesses.
Property - first time buyers

First – time buyers fail to take advantage of house price slowdown

The current property market has been very weak over the last year. But it appears that first-time buyers have been unable to take advantage of this, with house prices increasing more for them than other purchasers.

According to Halifax the average cost of a home for a first-time buyer in 2019 has increased by 9% to £231,455 which is an increase of £18,252 compared with 2018. The overall average growth of house prices in 2019 was 1.4% which shows that the price for first-time buyers outstrips everybody else by a high margin.

Factors that may have contributed to this sharp increase

Firstly, there is a trend for first-time buyers to save slightly longer and buy a larger family home instead of buying a small flat which means they will need to move again in three- or four-years’ time.

Secondly, there is the Government scheme called the Help to Buy ISA. In this ISA you can deposit £1,200 into it and save £200 per month after that. You can save a maximum of £12,000 into you ISA and when you want purchase your first home the Government will give you a 25% bonus, this will be an additional £3,000 if you save the maximum of £12,000. Furthermore, less expensive mortgages may have encouraged some first-time buyers to borrow more in order to purchase a better property.

Russell Galley from Halifax said: “While price growth in the overall housing market has been modest in recent years, the level of inflation facing first-time buyers is greater, which compounds the challenge in raising bigger deposits. However, given their importance to the market as a whole, it’s reassuring that the overall number of new buyers getting on the ladder remains stable.”

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Stephen Charles

Tax Partner, Sheffield