First-time buyers are set to be overtaken by existing homeowners as the largest buyer demographic, as COVID-19 drives a shift in the profile of home buyers, according to new data published by Zoopla.
The property expert’s latest House Price Index highlighted that first-time buyers have been the “driving force” of the housing market for the last decade – supported by Help to Buy and greater competition amongst lenders in the 90% and above LTV mortgage market. At the same time, Zoopla noted that the proportion of sales by existing homeowners has declined.
However, market uncertainty from coronavirus combined with the recession and a reliance on higher LTV mortgages to fund purchases is starting to impact the scale of first-time buyer demand, Zoopla’s latest research stated.
Figures revealed that despite a spike in demand amongst first-time buyers when the English housing market reopened after a 50 day closure on 13 May, demand has trended downwards over the last two months and is now back in line with pre-COVID levels.
Zoopla also suggested first-time buyer demand is set to weaken further over the rest of 2020 and into 2021. The index revealed that demand from existing homeowners shows no sign of weakening and remains 37% higher than pre-pandemic levels, and 53% higher than this time last year.
Zoopla research and insight director, Richard Donnell, said: “Housing market conditions remain strong as new restrictions are introduced to control the spread of COVID-19. These changes are likely to continue to support housing demand in the near term as the importance of the home grows.
“However, the housing market will not remain immune to the impacts of weaker economic growth and rising unemployment. A change in the mix of buyers is supporting market conditions with sustained demand from equity rich existing owners seeking more space and a change in location. In contrast, first-time buyer demand is weakening.
“First-time buyers have been a driving force of housing sales over the last decade. They remain a key buyer group but lower availability of higher loan to value mortgages and increased movement by existing homeowners means a shift in the mix of home buyers into 2021.”
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