First-time Buyers Need First-time Sellers
In 2014 the Help to Buy scheme gained more traction with big lenders providing 5% deposit mortgages as part of the Mortgage Guarantee scheme. The Help to Buy scheme has contributed to first time buyer numbers increasing by 22% between 2013 and 2014 to 326,000*.
Figures from the Department for Communities and Local Government show that only 118,760 new homes were constructed in 2014**, an increase of 8% on the previous year but for less than the 250,000 new homes experts suggested are needed to tackle the long term shortage of property stock and price inflation.
Of course not all first-time buyers move in to new homes but as a very basic calculation if there are 326,000 new home buyers and only 118,760 new homes constructed, then 207,240 homes need to be provided by the second hand market. 207,240 households need to decide to and be able to move on to their next property to make way for .
First-time Seller Challenges
The challenges faced by first time sellers are not dissimilar to those of first time buyers.
The gap between a starter home value and the next step up property price can be in the region of £200,000.
For example within half a mile of Fleet there is a huge diversity but the jumps are quite pronounced (approximated prices below include apartments and houses Rightmove 09.04.15):
- 1 bedroom properties range from £100,000 to £200,000
- 2 bedroom houses and apartments are in the region of £200,000 to £375,000
- 3 bedroom properties range from to £300,000 to £600,000
- 4 bedroom homes are in the region of £400,000 to £1,000,000
- 5 bedroom houses range from £450,000 to £1,500,000
Selling a home is a new experience
It is the first time they will need to choose an Estate Agent to sell their home, work out what they want from their agent, arrange an EPC if required, approve property details, instruct a solicitor for the sale, preparing the home for viewings, establish moving costs; which are likely to increase as they go up the ladder: all at the same time as going through the process of trying to buy a property.
Competition for medium property
Currently we have a high proportion of applicants looking for three bedroom properties and for properties in the £300,000 to £500,000 range. This means there is a great deal of competition for these second stepper homes too as those from a 1 or 2 bedroom property are likely to opt for a 3+ bedroom home if possible, with a view to extending the time between moves and feeling a notable difference on up-scaling.
When buying a first home it is generally accepted that this will not be your only home ever so first-time buyers are often more willing to compromise, things like school catchment areas may be less relevant for example. Therefore when looking for the next home, which might be triggered by changes in the lifestyle or family situation, choice is likely more restricted which means first time sellers could be pickier and more patient to make sure the find that right home, so hang on to that first time buyer property that little longer.
If you are thinking of selling your first home and moving to your second home contact your local Mackenzie Smith office and we will be happy to provide you with advice and an accurate property valuation.