25 Oct 2024
First-time buyers are having a moment in a shifting housing market
The tides of the housing market are shifting, and first-time buyers are finally seeing some relief in what has historically been a fiercely competitive landscape.
The tides of the housing market are shifting, and first-time buyers are finally seeing some relief in what has historically been a fiercely competitive landscape. For years, high prices and limited inventory have kept many aspiring homeowners at bay, but a unique set of circumstances is offering an unexpected opportunity for those entering the market for the first time.
Recent trends reveal a clear shift: it is now firmly a buyer’s market. More properties are being advertised, with a 7.2% increase in new listings on ESPC between June and August alone. This uptick in supply is giving buyers more choice than they’ve had in years. In many cases, the days of bidding well above the home report value – a practice common post-COVID – are starting to fade.
A growing trend of properties staying on the market longer also offers buyers a chance to negotiate deals closer to the valuation, rather than getting caught up in a bidding frenzy.
For first-time buyers, this shift is significant. Historically, they’ve been priced out by aggressive bidding wars or left with slim pickings as established homeowners snapped up properties. But today, prices are closer to home report valuations, and with more options available, first-timers have regained some leverage and can be more selective about their choices.
While it’s still critical to remain realistic about the property you can get for the price you can afford – older homes, like used cars, inevitably tend to come with more wear and tear – the balance of power is tilting slightly in favour of buyers.
This new trend follows an unusual period of market distortion caused by COVID-19. The pandemic saw a wave of desperate movers throwing ‘funny money’ at properties, often bidding 20 – 30% over valuation in a rush to secure their next home. That made prices soar, but it’s becoming clear this was an anomaly, and the current cooling of the market might be more of a reset than a crash.
That said, navigating this market isn’t without its challenges. The system of “offers over” in Scotland can be particularly difficult for first-time buyers unfamiliar with the process, and they can often have unrealistic expectations about what they can afford. Working with a mortgage advisor to better understand both what the bank will offer, and what is financially realistic for your individual circumstances, is crucial.
For those ready to take the plunge, now may be the right time. First-time buyers, often regarded as the second most favourable type of buyer after cash purchasers, are in a particularly strong position. Sellers, too, are adapting to the changing environment. With many needing to sell their current property to buy their next, chains are almost inevitable and, for some sellers, avoiding the stress of that risk is more appealing than squeezing out the last pound from the sale.
This means they may accept slightly lower offers from first-time buyers to avoid the uncertainties that come with a long property chain.
Yet, challenges remain. As developers continue to move unsold stock, often offering heavy incentives like covering initial mortgage payments or throwing in extras like turfing, there is still competition. But for first-time buyers, who can afford to be pickier than before, this is a window of opportunity that may not stay open for long.
The housing market is constantly evolving but, for the first time in a long time, first-time buyers can step into the fray with a little more confidence. By doing their research, managing their expectations, and working closely with mortgage advisors, they can seize a moment that many thought would never come. It’s not just about finding a home anymore; it’s about finding the right home at the right price. And in today’s market, that dream is inching closer to reality.