Covid-19 affected the world as we know it. Countries went under lockdown, and economies suffered, businesses shut down, and industries all around were affected by the Covid-19 pandemic. Ultimately, this pandemic led to world-wide lockdowns, bans on international travels and a rampant increase in unemployment in almost every country. The real estate industry was severely affected too. Buyers and sellers who were in the middle of closing property deals had to pause those deals temporarily. Potential buyers decided to forgo buying a new property to save for the future, and first-time buyers started second-guessing their decision to buy their first home. From estate agents in Bicester to letting agents in Manchester, almost every agent’s livelihood came to a standstill due to this pandemic. Now, first-time buyers are losing interest in the property market post the pandemic, and here is why.
The uncertainty of the future
Professionals and employees no longer have confidence in job security. With businesses shutting down worldwide, with international corporations sacking hundreds of people from every department and with companies letting go of employees, no one is certain of what the future holds in terms of employment and job security. Usually, first-time buyers consist of those people who spend years saving money to put down a deposit and then spend the next few years of their lives paying off the mortgage and high-interest rates. With the uncertainty regarding their job, which essentially means the uncertainty about a stable source of income in the future, first-time buyers are losing interest in the real estate market, both during the pandemic. It is expected that the sentiments will remain the same post the pandemic too.
Lack of interest in property in the city
Initially, almost every first-time buyer was interested in owning a property in the city. With the Covid-19 pandemic and since most people are now working from home, most homeowners, potential buyers, first-time buyers, and real estate investors are losing interest in purchasing property in the city. Instead, first-time buyers are now thinking about buying a property in smaller cities and boroughs in the outskirts. These smaller cities and developing towns offer prime properties at affordable prices, with bigger homes and more open spaces, which essentially provide a higher standard of living. Combine that with the convenience of easy transport links and a strong sense of community in these smaller towns and cities, making a winning combination for first-time buyers. Also, since first-time buyers are usually young professionals and young adults looking to start their own families, buying a spacious home in a family-centric community is a big plus, both for the short term and the long term.
The fear of mortgage payments
One of the biggest reasons that first-time buyers are losing interest in buying new homes and real estate in the UK is the fear of long term mortgage payments. While the rate of interest might have fallen during the pandemic and with the introduction of stamp duty holiday, real estate prices have become relatively affordable, and there is still a growing sense of fear and uncertainty about the future. Even though real estate has become more affordable in the past year, first-time buyers are worried about managing to pay long-term instalments to pay off their mortgage. Since no experts can conclusively say whether the prices of real estate in the UK will rise or fall in the coming years, buyers are fearful that they might get stuck paying off the mortgage for a property that might diminish in value in the coming years. At the end of the day, buying your own home is a long term commitment that requires a whole lot of financial planning and a permanent source of income. With the uncertainty of jobs in the future, most young professionals choose to put aside money for a rainy day instead of paying a big chunk of money as a down payment for the property. This is one of the main reasons that first-time buyers are seeming to lose interest in buying property.
Due to the uncertainty of employment in the future, many people are looking at job options overseas. Since the job market in the UK is nearly saturated at this point, many professionals have a high chance of getting well-paying jobs abroad. To accept this new job, these professionals will have to move to another country. If they chose to buy a house in the UK, they might not make the most of such a good opportunity. So, to keep their options open and to have the best possible life in the future, first-time buyers are choosing not to put all their eggs in one basket by investing in real estate at this moment of uncertainty.