Exactly one month on from the announcement in the budget of the Government’s First Buy scheme to help first-time buyers, research from Rightmove reveals what impact the scheme looks set to have on first-time buyer numbers and the wider property market. This will in turn impact on who will be buying conveyancing services from whom as consumers change their habits.
Rightmove polled over 3,000 would-be first-time buyers as part of its Consumer Confidence Survey and found that around 2 in 5 stated that they were more likely to purchase a new-build property since the announcement was made, with nearly half of this group indicating that they were ‘much more likely’ to buy. In addition, just 1 in 5 of those surveyed stated that they didn’t feel the scheme was attractive to them, offering further encouragement to First Buy in its early stages.
Historically first time buyers have typically bought from older housing stock.
The First Buy scheme announced on March 23rd allows first-time buyers to purchase a new-build property using just a 5% deposit, with a further 20% deposit provided in the form of a five year interest-free loan jointly funded by the government and the house builder.
Miles Shipside’ director of Rightmove comments: “First-time buyers are the life-blood of the volume housing market and the scarcity of this buyer group in the current market has been keenly felt. However, this survey shows that many are ready and willing to purchase, they just need the leg-up that a scheme like First Buy can provide in order to get them over the deposit hurdles currently being set by lenders. With only 1 in 5 viewing the terms of the scheme as unattractive, there appears to be strong support for deposit raising initiatives along these lines.”
However, Rightmove’s results did highlight a limitation of the scheme. First Buy only facilitates the purchase of new build properties, yet over a third of first-time buyers questioned by Rightmove stated that the scheme would make no difference to their buying intentions as they don’t wish to purchase a new build home.
Shipside adds: “A major issue in the current market is the lack of purchasing at the foot of the resale market. First-time buyers traditionally fulfil this function, and in doing so start chains which allow those at the bottom of the housing ladder to trade up. The channelling of first-time buyers into new build properties loses this benefit to the market. Opening up similar initiatives to include resale properties would be a real boost for the wider housing market and encourage first-time buyers to get involved by allowing them greater choice.
Conveyancers linked to new build developers will welcome this assessment. Others will wonder whether their marketing should focus on first time buyers or the buy to let market.
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