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First-time buyer purchases down 2.4%

The number of consumers borrowing to buy a new property was down across first-time buyers, home-movers and buy-to-let purchases in March, when compared with last year.

UK Finance’s mortgage lending trends, published today (May 16), showed there were about 28,800 first-time buyers with new homes in March — 2.4 per cent fewer than in the same month in 2018.

According to the trade body, this was the first month there had been a year-on-year decrease in first-time buyers since September 2018.

There was also a decline in the number of completed home-mover mortgages, which fell by 6 per cent to 25,280 compared to March 2018.

Mark Harris, chief executive of SPF Private Clients, said: “The decrease in number of first-time buyers after continuous growth over the past six months is a concern, and let’s hope it is just a blip in the numbers.

“First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen.”

The remortgage market continued to fare better however and in total, there were 4.1 per cent more residential remortgages in March than in the same month the year before.

Within this, there was a rise in the number of those who borrowed more money through their remortgage — up 9.1 per cent to 16,810 — while ‘pound for pound’ remortgages, where the consumer does not borrow any more money, dropped slightly by 1.1 per cent to 15,030.

This was the twelfth consecutive month of year-on-year growth in remortgaging and, according the UK Finance, this reflected the number of fixed-rate deals that are coming to an end as borrowers actively search for better, more attractive rates.

The remortgage market also grew in the buy-to-let sector but the purchase market declined.

About 5,000 new buy-to-let purchase mortgages completed in March, which was 9.1 per cent fewer than in the same month in 2018, while the number of remortgages increased by 3.9 per cent year-on-year to 14,400.

UK Finance stated the buy-to-let house purchase activity continued to contract due to tax and regulatory changes.

Gareth Lewis, commercial director of property lender MT Finance, agreed.

He added: “Remortgaging is up as those who bought before stamp duty hikes were introduced in 2016 are now remortgaging their fixed rates onto another competitive deal.

“Borrowers are taking out longer-term fixes on residential and buy-to-let deals as they protect themselves from wider uncertainty.”

In January, the Intermediary Mortgage Lenders Association warned that landlords would start to feel the pinch of new regulation in their tax returns for the first time, included the introduction of an additional 3 per cent stamp duty surcharge on second homes in April 2016 and cuts to mortgage interest tax relief.

Buy-to-let borrowers are also now subject to more stringent affordability testing under the Prudential Regulation Authority’s tightened underwriting rules.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said despite potentially disappointing numbers, there were no significant movements one way or the other.

He said: “[These figures] reflect what we are seeing at the coalface — it is a bit busier one month but down the next and then up again.

“It is no surprise either that buy-to-let mortgages are continuing their downwards trend as landlords face an onslaught of tax and regulatory changes with more on the way.

“We are finding buy-to-let remortgaging increasing is down to properties having to work harder in order to maintain profit levels so this is likely to continue.”

By Imogen Tew

Source: FT Adviser

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Why now is the perfect time to be a first-time buyer

It argues that first-time buyers can take advantage of cheap mortgage rates and stalling house prices as well as the Help to Buy ISA scheme, which ends later this year.

Rates on high loan-to-value (LTV) mortgages, which require borrowers to have a small deposit so are popular with first-time purchasers, are at a record low.

The average interest rate on a two-year fixed 95% LTV mortgage has fallen from 3.95% a year ago to 3.23% today, Defaqto data shows.

First-time buyers can also benefit from a weakening housing market.

Nationwide, the UK’s largest building society, last week reported that annual house price growth was just 0.9% in April, marking the fifth straight month of weak house price inflation.

Figures from The Royal Institution of Chartered Surveyors in March show that the number of properties coming onto the market has fallen for the past eight consecutive months.

But Defaqto warns first-time buyers need to hurry if they want to take advantage of the government’s Help to Buy ISA scheme, which closes to new entrants on 30 November 2019.

The scheme, which was specifically designed to help people get on the property ladder, lets savers put away up to £1,200 in the first month and then £200 a month after that, and the government will add 25% tax-free up to a maximum of £3,000 (or £6,000 if two people are buying together).

Savers can continue to save into a Help to Buy ISA until 1 December 2030.

Katie Brain, insight analyst at Defaqto, said: “Buying a home is an expensive undertaking and for many years we have seen that first rung of the property ladder move further out of the reach of first time buyers.

“Now, with stalling house prices and cheaper borrowing, we are entering a period of opportunity for buyers looking to make their first home purchase.

“For those looking to get a mortgage, it is important to do your sums and check exactly what you can afford to borrow. While interest rates are low, an increase of just 1% can add hundreds of pounds to a monthly repayment and thousands to the overall cost of a home.”

first-time buyers

Written by: Joanna Faith

Source: Your Money

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First Time Buyers Helped by Weak House Price Growth

House price growth in the UK remained subdued for the fifth month in a row in April, according to the latest figures from Nationwide.

House prices in the country grew 0.9% in April compared to the same time last year – a slight rise from the 0.7% annual growth seen in March. Annual house price growth has in fact been below 1% every month since December 2018. However, house prices actually fell month-on-month in April, dropping by 0.4% in April. According to the Nationwide House Price Index, the average price of a home in the UK is now £214,920.

Before the Brexit referendum in 2016, house prices in the UK were growing by around 5% each year. But as many market analysts have mentioned Brexit uncertainty as a cause of the subdued growth seen recently, the stagnating prices have helped to attract a growing number of first-time buyers to the market.

The number of mortgages being taken out by first-time buyers today is approaching the levels seen before the global financial crisis in 2008. As well as the slow growth of property prices, first-time buyers are also being attracted to the housing market due to high employment rates, real wage growth and low mortgage rates.

“While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months,” said Robert Gardner, chief economist at Nationwide.

“While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first-time buyers entering the housing market in recent quarters. Indeed, the number of mortgages being taken out by first-time buyers has continued to approach pre-financial crisis levels in recent months.”

While low mortgage rates, the strength of the labour market and projects such as the government’s Help to Buy scheme are helping first-time buyers get onto the property ladder, the biggest obstacle remains raising a large enough deposit.

“First time buyer numbers have been supported by the strength of the labour market conditions, with employment rising at a healthy rate, and earnings growth slowly gathering momentum,” said Gardner. “While house prices remain high relative to average earnings, low mortgage rates have helped to support mortgage affordability. Indeed, raising a deposit appears to be the major barrier for prospective first-time buyers.”

Jeremy Leaf, former residential chairman at RICS, said: “Soft growth in the last set of figures from Nationwide is continuing and confirmed on the high street. Clearly, Brexit uncertainty in the minds of homebuyers is still outweighing almost record low mortgage rates and employment numbers as well as improved affordability. A glimmer of good news is that first-time buyers are taking advantage, particularly of help to buy and deposits from the bank of mum and dad, not forgetting reduced competition from landlords.”

Source: Money Expert

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1,000 homes a week purchased through Help to Buy last year

Just over 52,000 homes were purchased through the Help to Buy: Equity Loan scheme in England in 2018 – a 12% increase on the previous year, the latest government figures showed.

Across what’s being hailed as a very successful year for Help to Buy by mortgage industry figures, an average of around 1000 households per week bought property through the scheme.

The Ministry of Housing, Communities and Local Government (MHCLG) introduced Help to Buy in 2014 as a way of assisting first time buyers trying to get on the property ladder, and the total number of homes bought with its help since its inception is now above 210,000.

More than 42,000 (81%) of homes bought in England in 2018 through Help to Buy were purchased by first-time buyers – a 14% increase on 2017 – which means one in seven purchases by first-timers was through Help to Buy.

Recent research showed first-time buyers needed to find a deposit of more than £30,000 in order to purchase a home in 2018 – an increase on the previous year.

Very successful year
Kate Davies, executive of Intermediary Mortgage Lenders Association (IMLA), said: “The statistics for 2018 highlight a very successful year for Help to Buy. The government’s programme has continued to stimulate the bottom of the housing ladder and indirectly support the whole of the UK property sector throughout 2018.

“With as many as one in every seven first-time buyers using Help to Buy in England in 2018, it is likely that the programme will remain invaluable in supporting home buyers over the remaining years of the scheme.

“While we are yet to see if the programme is continuing to grow in 2019, strong HMRC transaction statistics for Q1 2019 possibly indicate that Help to Buy-fuelled sales are still running at a healthy pace, continuing the trend we have been witnessing for more than a year.”

Beyond 2023
The government has indicated that Help to Buy will come to an end in 2023 and, while welcoming the figures for 2018, Craig Hall, head of broker relationships and propositions at Legal & General Mortgage Club, warned that first time buyers need further help.

He said: “Looking beyond the scheme’s end, it’s vital that government and industry works together to ensure these buyers remain supported. It’s likely that we may see private schemes coming to market to help fill the void.”

He added that higher LTV lending from mortgage providers and family assist mortgages are also helping first-time buyers, who should always seek out the expertise of a mortgage broker before taking any course of action.

Written by: Max Liu

Source: Your Money

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First-time buyer completions up 4.1%

The number of first-time buyers completing mortgages has increased by 4.1 per cent since last year, according to UK Finance.

UK Finance’s mortgage lending trends, published today (April 17), showed that 24,800 first-time buyers took out a mortgage in February 2019 — 4.1 per cent more than in the same month in 2018.

The trade body stated this was the fifth consecutive month of year-on-year growth in first-time buyer numbers.

However, the number of current home owners moving house remained steady, rising 0.1 per cent in the year to 23,660.

The remortgaging market fared better. About 18,200 people remortgaged their home to gain extra funds — 10 per cent up on February 2018 — and those remortgaging without borrowing money increased by 7.8 per cent to 18,360.

On average, those remortgaging had a 43 per cent deposit and their loan-to-income ratio was 2.74.

This was considerably lower than residential mortgages which showed an average LTV of 72 per cent and a loan-to-income ratio of 3.37.

UK Finance stated customer engagement in the remortgaging market remained high with borrowers able to access a wide range of competitive products.

The trends showed buy-to-let mortgages were on the decline as only 4,800 buy-to-let mortgages completed in February 2019 — 7.7 per cent fewer than in the same month in 2018.

More people opted to remortgage in the buy-to-let market as 14,400 remortgages, 2.1 per cent more than the same period last year, were completed in the month.

UK Finance suggested the buy-to-let house purchase market continued to contract due to tax and regulatory changes, while buy-to-let remortgaging increased as borrowers moved from fixed rate mortgages and locked into attractive new rates.

Commenting on the findings, Dave Harris, chief executive of More 2 Life, said: “The growing number of first-time buyers in the market can in part be attributed to parents passing on wealth to their children to help with home purchases.

“With wages still failing to keep up with inflation, the pockets of most first-time buyers aren’t proving deep enough to provide the often hefty mortgage deposits they need to take a first step on the property ladder – but thankfully, this is where parents and grandparents are stepping in to help.”

David Copland, director of mortgage services at TMA, said while activity in the first-time buyer segment continued its upward trajectory, more attention was needed to help the buy-to-let market.

He said: “As previous tax and regulatory changes continue to loom over the private rental sector, advisers will prove essential in guiding these customers towards the best solutions to fit their individual needs.”

Richard Pike, Phoebus Software sales and marketing director, agreed that buy-to-let purchases continued to struggle but suggested that, like many areas that require an element of investor risk, this could have been affected by continued Brexit uncertainty.

He said: “It is difficult to overstate the impact the current negotiations between Westminster and Europe are having on the UK as a whole. We have been in a state of limbo since Article 50 was triggered and there is still no sign of a solution.

“This is, of course, having a knock-on effect and it is highly likely that the figures we will see in the coming months, which reflect the run-up to the original withdrawal deadline, will be more subdued.”

However, Mr Pike added there were positives to be taken from the UK Finance figures as the market had managed to keep ahead compared to 2018 in most areas.

He added: “When you consider these figures only tell part of the lending story in the UK, that is encouraging.”

By Imogen Tew

Source: FT Adviser

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First-time buyer activity up while buy-to-let drops again

There were more first-time mortgages in January than that of the previous year, while remortgages and buy-to-let home purchases saw a decline, UK Finance’s Mortgage Trends Update for January has found.

There were 25,100 new first-time buyer mortgages completed in January, 4.6% more year-on-year and 25,300 homemover mortgages completed in the month, 2.8% more year-on-year.

There were 5,500 new buy-to-let home purchase mortgages completed in January 2019, 1.8% fewer than in the same month a year earlier. However, the rate of decline is less than in January 2018, when there was a 5.1% year-on-year decrease in the number of buy-to-let home purchases.

Matt Andrews, managing director of Mortgages at Masthaven, said: “Despite the current political uncertainty, the first-time buyer market appears largely unaffected.

“Whether this be attributed to government initiatives such as the extension of the Help to Buy scheme, the ‘gifting’ of wealth from parents to children, or an increase in flexible products offered by lenders, this segment of the market is in good stead for whatever political and economic decisions are made in the coming weeks.

“More could still be done for the buy-to-let market to encourage greater purchase activity. The slight softening in remortgaging figures for this sector suggests landlords remain committed to the market, greater product innovations, alongside a range of housing tenure that meets consumer needs, would certainly be welcomed so the sector can reach its full potential.”

Gareth Lewis, commercial director at specialist lender MT Finance, added: “There was always a worry that the lending market would be depressed at the beginning of the year as we edged ever close to the March deadline for Brexit, with this preventing people from buying and selling.

“But these figures are actually very positive and show that people have come out and continued to buy, so sentiment is pretty good.

“There is still pressure on the buy-to-let space and this will continue unless something is done to ease all the restrictions that have been placed on landlords in terms of taxation and higher stamp duty.

“A review of stamp duty at least could stimulate movement in this area but perhaps this is wishful thinking, with the government loathe to make any changes.

“First-time buyer numbers remain strong and encouragingly, loan-to-values have been consistent so it is not as if they are over-stretching themselves. With the average LTV around 85%, sensible lending is being done rather than chasing volume.”

There were 47,400 new homeowner remortgages completed in January 2019, 2.7% fewer than in the same month a year earlier.

Remortgaging in the buy-to-let sector saw a similar drop-off in activity, with 15,800 new remortgages, a 4.2% drop from the year before.

While this amounted to a year-on-year fall, it is worth noting that January 2018 was a particularly strong month, with the highest number of residential remortgages in nine years and the highest number of buy-to-let remortgages on record.

Overall, UK Finance expected the remortgaging sector to see continued strength in 2019, as more tranches of fixed-rate deals come to an end.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The year has got off to a remarkably good start on the lending front despite ongoing political uncertainty. Clearly, people have had enough with situations they can’t control and are getting on with their lives.

“Lenders are keen to lend and rates are extremely competitive. Several lenders have trimmed rates this year in an effort to encourage more business, while innovative tweaks here and there are increasing as an alternative to offering the cheapest rate in the market.

“Swaps have dipped further over the past few days on the back of heightened uncertainty around Brexit which is likely to continue to result in lenders offering perks such as cash back and free valuations, and going down the innovation route, which is good news for borrowers.

“The all-important first-time buyer numbers continue to grow in numbers as lenders offer more products at high loan-to-values and the Help to Buy scheme remains popular, despite its critics. This is good news for the market as a whole.”

By Michael Lloyd

Source: Mortgage Introducer

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First-time buyers shore up UK housing market

The residential mortgage market has had a strong start to the year, as the number of first-time buyers entering the market increased by 4.6 per cent.

The latest data from UK Finance, published today (March 14), said 25,100 new first-time buyers completed in January 2019, an increase of almost 5 per cent when compared with the same month in 2018.

The number of homeowner mortgages completed in the month rose to 25,300, a 2.3 per cent year-on-year increase.

Gareth Lewis, commercial director at specialist lender MT Finance, said: “There was always a worry that the lending market would be depressed at the beginning of the year as we edged ever close to the March deadline for Brexit, with this preventing people from buying and selling.

“But these figures are actually very positive and show that people have come out and continued to
buy, so sentiment is pretty good.

“First-time buyer numbers remain strong and encouragingly, loan-to-values have been consistent so it is not as if they are over-stretching themselves.

“With the average LTV around 85 per cent, sensible lending is being done rather than chasing volume.”

New homeowner remortgages, however, fell by 2.7 per cent when compared with January 2018, with 47,400 completed during the first month of this year.

Remortgaging in the buy-to-let sector also fell by 4.2 per cent when compared with the year before.

Kevin Roberts, director at Legal & General Mortgage Club, said: “While the current political landscape is forcing some homeowners to ‘improve, not move’, increased competition within the mortgage market continues to help thousands of buyers with their property plans and ambitions.

“With mortgage rates having halved in the last decade, and a growing number of lenders offering 95 per cent LTVs, first-time buyers stand in a particularly strong position.

“For any would-be borrowers, looking to make the most of the competitive rates and flexibility the mortgage market has to offer, speaking to a mortgage adviser is a wise first move.

“Not only can these professionals provide access to thousands of mortgage products, but their extensive knowledge of the market means they know which lenders will best cater to a borrower’s unique circumstances.”

Meanwhile, new buy-to-let home purchase mortgages completed in January were 1.8 per cent down on the same month a year earlier.

According to UK Finance, the rate of decline this year is less than experienced in January 2018, when buy-to-let home purchases plummeted 5.1 per cent year-on-year.

Matt Andrews, managing director of mortgages at Masthaven, said: “More could still be done for the buy-to-let market to encourage greater purchase activity.

“The slight softening in remortgaging figures for this sector suggests landlords remain committed to the market, greater product innovations, alongside a range of housing tenure that meets consumer needs, would certainly be welcomed so the sector can reach its full potential.”

Jenny Turton is a freelance journalist

Source: FT Adviser

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Number of first-time buyers in the UK reaches an all-time high

The number of first-time buyers wanting to get their foot on the property ladder has reached a 12-year high in the latest report from UK Finance.

In the new study, they have revealed that during 2018 the number of first-time buyers applying for mortgages reached 370,000 — 1.9 per cent more than the previous year. This is the highest number of first-time buyers since 2006, when 402,800 mortgages were completed.

It also reveals that £62 billion of new lending in 2018 was up by 4.9 per cent in comparison to 2017.

With government incentives such as Help to Buy lending a hand to the new generation of homeowners, more buyers were able to purchase their first home without the hefty deposit.

Elsewhere, the study also reveals that there were 5,100 new buy-to-let home purchase mortgages completed in December, which has fallen by 5.6 per cent on the same month of the previous year.

‘The mortgage industry helped 370,000 people buy their first home in 2018, the highest number in 12 years, as competitive deals and Government schemes such as Help to Buy continue to boost the market,’ explains Jackie Bennett, the Director of Mortgages at UK Finance to Landlord News.

‘Homeowner remortgaging also saw strong growth, driven by customers locking into attractive rates, a trend we expect to continue in 2019, as more fixed rate mortgages come to an end.

‘Demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes. However, the number of buy-to-let remortgages reached a record high of almost 170,000 last year, suggesting many landlords remain committed to the market.’

Planning to buy your first home this year? With house prices rising just £714 in a year, now could be the time.

Source: House Beautiful

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First-time buyers dominate property purchase market for first time in a generation

First-time buyers now account for the majority of mortgaged property purchases, overtaking the joint numbers of subsequent-time buyers and buy-to-let investors, for the first time since 1995.

According to the latest Halifax First-Time Buyer Review, first-time buyers now account for just over half of all property purchases funded by a mortgage, rather than cash transactions, up 38% on a decade ago. The average price paid for a borrower’s first home is up 39% on average, from £153,030 in 2008 to £212,473 in 2018. Over the same period the average deposit has jumped by 57% from £21,133 (14% of purchase price) to £33,252 (20%)

The research shows that the total number of individuals or couples buying property for the first time has increased by 2% in the past year, continuing a seven year upwards trend. Growth last year was considerably slower than 2017 (7.6%) and 2015 (9%), but overall the numbers are up 92% on the low of 192,300 seen in 2008.

The number of first-time buyers has gone up 2% in the last 12 months, continuing an upward trend over the last seven years. Although growth in 2018 was at a slower rate than 2017 (7.6%) and 2016 (9%), first-time buyers overall have increased by 92% from an all-time low of 192,300 in 2008.

First-time buyers now account for just over 50% of all house purchases with a mortgage, an increase from 38% a decade ago. Halifax data revealed that the average price paid for a typical first home has gone up by 39%, from £153,030 in 2008, to £212,473 in 2018, and the average deposit has increased by 57% from £21,133 to £33,252 over the same period¹.

Borrowers buying in London are putting down a staggering £110,656 on average,  while those in Wales are paying the lowest average deposit of £16,449.

Terraced houses, closely followed by semi-detached properties have continued to be the first-time buyer’s home of choice over the past decade, making up two-thirds (67%) of mortgages for first homes in 2018.

The average age of a first-time buyer in 2018 has remained at 31 – two years older than a decade ago. In London it has grown from 31 to 33 since 2008 – the oldest in the UK. The biggest increase in age was in Northern Ireland, up by three years from 28 to 31.

Russell Galley, managing director, Halifax, said: “New buyers coming on to the ladder are vital for the overall wellbeing of the UK housing market, and the continued growth in first-time buyers shows healthy movement in this important area – despite a shortage of homes and the ongoing challenge of raising a deposit.

“Last year was the first year that first-time buyers accounted for the majority of the market since 1995, which shows that the factors reducing some of the associated costs – such as continued low mortgage rates and Stamp Duty – are supporting the increasing number of people taking their first step on to the property ladder.”

Source: Your Money

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Help to Buy sends number of first-time buyers into the 12-year record books

The number of first-time buyers reached a new high last year – with the catalyst being Help to Buy, the scheme that helps purchasers of new-build homes only.

According to trade body UK Finance, there were 370,000 new first-time buyer mortgages completed last year, some 1.9% higher than in 2017.

This is the highest number of first-time buyer mortgages since the pre-crash year of 2006 when the figure was 402,800.

In the last month of last year, there were 30,900 first-time buyer mortgages completed, up 1.6% on a monthly basis.

The number of home-mover mortgages was down in December, at 30,000. This was 1.3% fewer than in November. Altogether last year, there were 367,800 new home-mover mortgages, 1.9% down on 2017.

Buy-to-let purchase mortgages also dwindled last year.

In 2018, there were 66,400 new buy-to-let home purchase mortgages, or 11.5% fewer than in 2017.

Remortgaging in both home-owner and buy-to-let sectors rose – by 10.8% and 11.2% respectively.

Jackie Bennett, director of mortgages at UK Finance, said: “The mortgage industry helped 370,000 people buy their first home in 2018, the highest number in 12 years, as competitive deals and government schemes such as Help to Buy continue to boost the market.

“Home-owner remortgaging also saw strong growth driven by customers locking into attractive rates, a trend we expect to continue in 2019 as more fixed-rate mortgages come to an end.

“Demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes.

“However, the number of buy-to-let remortgages reached a record high of almost 170,000 last year, suggesting many landlords remain committed to the market.”

John Phillips, operations director at Just Mortgages and Spicerhaart, said: “First-time buyers are holding up the purchase market, as incentives Help to Buy and the freeze on Stamp Duty, plus new mortgages like Lloyds ‘lend a hand’ 100% mortgage offering coming on to the market, are making it easier for them to make that first move on to the housing ladder.

“We are increasingly seeing people choosing to remortgage to free up cash to do work to their current homes rather than move, either because the Stamp Duty and other costs make it too expensive, or because they are unwilling to take the risk in an uncertain market.

“But post March 29 I think there will be a change in sentiment. No matter what the outcome, uncertainly will be taken out of the equation, and as a result, I think the purchase market will start to pick up. But overall, we will probably not see the effects of that until much later on in the year.”

Despite the surge in first-time buyers, the number of renters between the ages of 25 and 34 has risen 20% since 1998, according to the ONS.

Source: Property Industry Eye