The second-hand property market has been stopped in its tracks by the lockdown.
Physical viewings contravene social distancing rules, valuations have been cancelled and many high loan-to-value mortgage products have been withdrawn.
However, the new homes sector, which is aimed primarily at first-time buyers, is still open for business.
First-timers, of course, have no property to sell. So if they’ve saved their deposit and are comfortable with a virtual viewing of their as-yet unfinished home, they could benefit from the inevitable price falls.
House price forecasts
New research by Homes & Property reveals that house prices in six boroughs could drop below the London average of £483,922.
Values in Barnet, Brent, Lambeth, Merton, Kingston upon Thames and Southwark could crash through the threshold, while Barking & Dagenham, the cheapest borough, could fall below the £300,000 mark, from £303,631 to £273,267.
Rightmove expert Miles Shipside says first-time buyers will also face less competition now than they did in the aftermath of the global financial crisis.
First-time buyers may be reluctant to take the plunge in the face of long-term economic damage — but experts predict a recovery from next year.
After the initial “short, sharp shock” has been taken on board, Savills’ Lucian Cook is optimistic, forecasting price growth of 15 per cent over the next five years.
I’m A first-time buyer with a deposit but need more help. What schemes are out there, despite Covid?
Help to Buy
The Government-backed Help to Buy scheme is available on new homes valued below £600,000 in London.
The buyer needs a five per cent deposit while the Government puts up a 40 per cent loan and the bank lends the remaining 55 per cent.
It is therefore a 95 per cent loan-to-value product and was withdrawn by many lenders when coronavirus hit.
However, lenders are starting to offer it once again. The lenders offering Help to Buy London products are:
- Bank of Ireland
- Leeds Building Society
- Leek United Building Society
- Nationwide Building Society
- Newbury Building Society
Shared-ownership homes in new developments are still for sale and being advertised online. The buyer purchases a share of the property — a minimum of 25 per cent — and pays rent to a housing association on the rest. This lowers the deposit requirement. Visit sharetobuy.com for properties for sale, or go directly to housing associations such as Peabody (peabody.org.uk).
Stamp duty holidays and legal fee discounts
Some developers out there are offering stamp duty holidays and deals to pay your legal fees when you register for a new home online. These offers are likely to ramp up as housebuilders compete to sell new homes.