As buyers are enjoying the best of property discounts and cheap prices, the future might be ugly. This is due to a recent report suggesting that homeownership could become “out of reach” for the first time buyers. The report was a summary of a survey done by agents who predicted the possibility of a medium-term downturn in the real estate industry, due to a short-lived boom expected after the pandemic.
The survey made it clear that reopening of the property market will lead to a rise in housing prices and also their demand. However, this will only be temporary, as the prices will inevitably fall on average. The agents further warned that most property prices will have decreased to as low as 20% below the current marketing price by the first half of next year. This is then expected to flatten thereafter.
As first time buyers see house fall in prices as a chance to invest, this might not be the case this year. However, those who have had a chance to save up money during the pandemic period will benefit. Be aware now more than ever lenders will be on alert to protect themselves from borrowers who might be unable to repay mortgages. No lender wants to add to the long list that is already existing. To be certain that the borrower will be able to service their mortgage, they will have to ask for a bigger deposit upfront.
“The current crisis looks set to deepen pre-existing inequalities and the growing divide between those who can look forward to homeownership, and those for whom this dream is increasingly out of reach.” stated the report.
Since most people have lost jobs, saving has proven to be hard. This has mostly affected young people, some having to put into their previous savings for current essentials. This then makes it almost impossible for most young people to own properties even after the prices fall. “Although prices are projected to fall – perhaps dramatically – in the wake of the pandemic-induced recession, this drop won’t make things any easier for typical young first-time buyers looking to purchase their first home,”
The agents are hence calling for the government to support buyers by creating channels that may help citizens to get mortgages with better terms. This way, the property might be spared from possible nightmares upon the pandemic.