First-time buyers will be targeted in July's General Election, says analyst
Interest rates were arguably ‘too low for too long’, so will be cautiously lowered, according to Hamptons’ David Fell.
Fell (pictured), who is housing analyst for the residential estate agent and property services organisation, believes lower rates will attract some purchasers back into the market, but warns that younger borrowers will face a higher cost for smaller properties.
“By this time next year, I’d expect interest rates to be lower than they are today, although probably not by a great deal,” Fell told Mortgage Introducer.
“Higher interest rates have meant younger generations in particular are paying more for their homes. Often this means paying back a mortgage over a much longer period, meaning they have less money to spend elsewhere.
“Existing homeowners have also stayed put for longer, sometimes in homes they’ve outgrown. So, with owners out of the market for longer than they used to be, it’s perhaps been more challenging for the industry to remain connected to past and potential clients.”
Operating in London and the south of the UK, Hamptons has over 150 years of experience in the market, offered services including UK and international sales, lettings, property management, and valuation and property finance. Since early 2021, Hamptons has been part of Connells, which is in turn owned by the Skipton Group, giving Fell access to real-time data from across the group.
“With the benefit of hindsight, I think there’s an argument that interest rates were too low for too long,” he said. “So central banks will probably be a lot more cautious about cutting rates than they were about raising them. Lower rates will bring some buyers back into the market, but younger Millennials and Gen Z buyers will be spending more to buy less housing than they used to.”
What housing policies will the main political parties offer in the General Election?
With the announcement of the General Election taking many by surprise yesterday, all eyes will now be on what the main political parties promise in terms of housing policy, ahead of polling day on July 4.
“Both main parties are likely to have an offer tailored to helping first-time buyers in their manifestos,” reasoned Fell. “Back when mortgage rates were much lower, reducing the deposit barrier helped many into homeownership. But in a world of higher interest rates reducing the size of the deposit required is not the game-changer it once was. Today the cost of monthly mortgage repayments and how affordable they are is the biggest barrier to homeownership.”
He continued: “Property touches nearly every aspect of everyone’s lives, and increasingly stretched affordability for both buyers and renters has had a knock-on effect on how people live, younger generations in particular. But the property industry tends to change slowly and the way people buy and sell a home hasn’t really moved that much over the last generation. While the industry as a whole has become more data-driven, relationships still matter more.”
Read more: UK rental market see slower growth - Hamptons
How are homeowners’ moves changing?
Homeowners are typically moving less often than they once did, observed Fell, meaning they increasingly value the advice and reassurance that comes with being able to talk directly to someone who’s experienced in a process which can be stressful and longwinded.
“While many industries have seen a move towards automation and helping would-be buyers to help themselves, if anything, over the last five or so years, the property industry has moved in the opposite direction,” he said.
Having graduated from the University of Sheffield in 2010, with a Masters in Town Planning, Fell has a well-established career in the property market, including working for Catalyst Housing Association’s development team and Countrywide, where he helped build its residential property fund. He also worked for the private sales arm of A2 Dominion, before settling in at Hamptons on the eve of the first lockdown.
Closer to home, he recently bought a house with his wife which he’s currently in the process of slowly renovating. “To keep costs down, I’ve started to learn a few new trades by watching videos online,” he confided.
