“The pandemic has cemented the position of existing homeowners – utilising the growth in equity they have acquired to carry out this work, while also seeing their property’s value rise at the same time.”
It’s been interesting to see how a number of housing market stakeholders are ‘reading the runes’ at the moment in terms of trying to understand what path we will all be taking in the future.
There’s no doubting that the pandemic has thrown a considerable spanner in the works but whereas you might well argue that this sees the market veering off into a wholly different direction, there is as much evidence to suggest that it merely reinforces the certainties of the most recent past and it puts us much more firmly on the path we were already moving along.
In a way, as with all these things, I suspect the truth of the matter lies somewhere in between. For instance, pre-pandemic the thought of seeing a headline such as ‘Shock plans to work from home forever: Ministers propose to make it illegal to be forced into offices’ would have been unfathomable, but here we are.
Will this legislation ever happen? Who knows, but there will certainly be many workers who will not want to be ‘forced’ into the office but will want the flexibility to be able to stay at home and work, or go in if they feel it is required or beneficial. Perhaps, the days of being able to ‘force’ people into an office environment in that sense are over, and there may well be employment legislation brought in to make that kind of ‘you have to work in the office’ ultimatum illegal.
Office work spaces are already being shifted – a case of undoing the situation where we cram as many desks in as possible to more open, socially-distant arrangements; where larger meeting rooms are offered with collaboration in the office the raison d’etre for being there.
And, of course, this clearly shapes the housing we have and need. I’m not sure about you but the level of house renovation that seems to be going on in my local area is monumental. People are already cottoning on to the fact that trips to the office are likely to be more infrequent and therefore, not only do we need work spaces at home, but other amenities if we’re going to be spending more time here.
What we perhaps can say however is that the pandemic has cemented the position of existing homeowners – utilising the growth in equity they have acquired to carry out this work, while also seeing their property’s value rise at the same time.
UK Finance recently pointed this out in terms of the pre-eminence of homemoving outpacing first-time buyer numbers, for example. In Q1 this year homemover activity jumped by 83% compared to the same quarter in 2020, and while the stamp duty holiday has obviously acted as a catalyst here, homemovers have been using their equity in some cases to buy their next property outright with cash but also to move up the ladder by having that bigger deposit and being able to secure the necessary mortgage.
In that sense, UK Finance believe the stamp duty holiday actually benefited existing homeowners and landlords far more than first-timers who had access to a saving beforehand anyway but have still been hampered by the lack of high LTV lending and the sheer difficulty in keeping up with rising prices from the perspective of saving for a deposit.
It’s difficult to get that deposit together when the goalposts keep moving and, as we’ve seen over the last year, average house prices in pretty much every corner of the country have risen fairly significantly. They may come off these highs slightly when the stamp duty deadline(s) have been and gone, but will they come off by enough to make purchasing more affordable for first-timers? Again, that is doubtful in the extreme.
Which is why the provision of high LTV lending in this space is so important. You will have seen the headlines made recently around renting now being cheaper than buying for the first time in eons, which I tend to take with a pinch of salt, but you can understand the sentiment behind it and the current situation certainly doesn’t make it easier for first-timers to get on the ladder, despite the support they get.
High LTV lending has, and always should, play a major role here and while it’s been positive to see the growth in product numbers recently, we need far more of this from lenders, and a commitment to work in this area without any caveats around continued Government support.
New non-Government supported schemes like the recently-launched Deposit Unlocked variety are going to play a huge part in this, and as more lenders join that will certainly grow momentum. But we will need more if we want to achieve any kind of market parity for first-timers when compared to those already lucky enough to be on the housing ladder. This should never be a closed shop – the market always needs new blood and it would be a disaster to think anything else.
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