While the Covid pandemic made homeownership a larger priority for 63% of first-time buyers, 44% delayed their plans to buy a home in 2020, according to new research from Santander.
The study – Life after Lockdown; The Future of UK Homeownership – found that while the Bank of England has reported that the pandemic has enabled many households to accumulate more savings, just 17% of first-time buyers said lockdown enabled them to save more money for a deposit, compared to 31% of all buyer types. This inequality comes as younger buyers more harshly felt the effects of furlough, unemployment and reduced income during Covid-19, while many continued to grapple with the cost of renting. 47% of first-time buyers said they delayed their buying plans due to concerns about their personal finances.
Meanwhile, 54% believe that financial support for first-time buyers from the Bank of Mum and Dad will be less available post-pandemic. ONS 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. Santander said that estimates suggest that on average, the Bank of Mum and Dad provides more than £18,000 of financial support to a first-time buyer.
As a result, 52% say that raising a deposit is the biggest issue facing first-time buyers today, an increase on the 30% who identified this as the key barrier in Santander’s 2019 first-time buyer study.
In addition, Santander’s analysis found that while the stamp duty holiday introduced in June 2020 was clearly an incentive to homebuyers, just 22% of first-time buyers said they were encouraged by the holiday, compared to 46% of second home buyers and 44% of buy to let buyers.
47% of first-time buyers 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 warns that 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. House prices have already grown almost twice as fast in Wales (11.0%) and the North-West of England (10.5%) as they did in London (5.7%)6 during 2020.
As a result, first-time buyers may find themselves priced out of a growing number of areas, with 33% saying that finding an affordable property in their preferred area is a barrier to ownership – three times the 11% who cited this as a barrier in 2019.
13% of first-time buyers said they had delayed plans to move home while there was uncertainty on what their future remote working policy might be.
Tracie Pearce, chief customer officer, Home at Santander, said: “The impact of the pandemic on the housing market has been significant with many people reassessing what they want from their homes.
“Mortgage providers have seen huge demands while brokers have been quick to support with online advice and flexible hours to help customers incentivised by the booming market and government support with stamp duty. However, despite the support and advice available, many younger people looking to take their first step on the property ladder have seen their earnings and job prospects hit hard, impacting their dreams of homeownership.
“Our report highlights that it is now really important that industry and government reflect on the last year and work together to make defining changes to support a new generation of first-time buyers.”
