Stamp Duty Holiday - first time buyers are the big losers

An authoritative study on the housing market has shown that the big losers from the pandemic have been first time buyers.

The gap between struggling first-time buyers and those already on the property ladder has widened in the past 15 months, with the year-long stamp duty holiday fuelling more rising prices recently.

The study, which analysed the opinions of 12,000 UK adults, was by mortgage lender Santander. It found that while the pandemic made homeownership a bigger priority for nearly two-thirds of first-time buyers, well over four in 10 have delayed their plans to buy a home. 

Despite suggestions that the pandemic enabled many households to accumulate more savings, only about one in six first-time buyers said lockdown enabled them to save more money for a deposit, compared to 31 per cent of all buyer types. 

This inequality comes as younger buyers more harshly felt the effects of furlough, unemployment and reduced income, as well as the cost of renting.

Nearly half of first-time buyers said they delayed their buying plans due to concerns about their personal finances.  

Alongside this, just over half believe that financial support for first-time buyers from the Bank of Mum and Dad will be less available post-pandemic. 

Government figures show that redundancies among the over-50s almost tripled over the last 12 months, contributing to financial pressures for parents who might previously have been able to support their children in raising a deposit.

As a result, 52 per cent of first time buyers say raising a deposit is the biggest issue they face, an increase on the 30 per cent who identified this as the key barrier in Santander’s 2019 study. 

Meanwhile, Santander's analysis found that while the stamp duty holiday introduced in June 2020 was clearly an incentive to homebuyers, just 22 per cent of first-time buyers said they were encouraged by the holiday, compared to 46 per cent of second home buyers and 44 per cent of buy to let purchasers.

Almost half of FTBs say the pandemic has made traditionally more expensive, inner-city living less desirable while rural and coastal living has increased in popularity among all buyer types.

However, Santander suggests the result of this could be that regional house prices grow disproportionately quickly with the emergence of new ‘virtual commuter belts’ - areas increasing in popularity which would previously have been discounted as being too far from their place of work.

As a result, first-time buyers may find themselves priced out of a growing number of areas, with 33 per cent saying that finding an affordable property in their preferred area is a barrier to ownership – three times the 11 per cent who cited this as a barrier in 2019.

Over one in 10 FTBs said they had delayed plans to move home while there was uncertainty on what their future remote working policy might be.