The coronavirus had halted the UK housing market until its re-opening today (13/05/20), leaving thousands of transactions incomplete. As a result, short-term house prices are predicted to drop by about 5-10%.
But while this is a problem for the average homeowner, it could mean a small step for those saving for their first home.
Interested in helping first-time buyers, mortgage comparison experts at Bankrate.com/uk have provided these tips on saving for your first home whilst in lockdown:
The time taken to save for your first house depends on how much you can put away per month and the size of the deposit you’re aiming for (average deposit in the UK is around £33,000) – this could be anywhere between two and 15 years for the mortgage you need.
Tto further increase your savings during lockdown and beyond, consider the following:
- Budget – study your incomings and outgoings closely to determine how much you could save. Consider using banking and budgeting apps to help and create a sensible budget to follow.
- Cut back on non-essential items and chase refunds – consider cancelling some of the luxuries you don’t really need. Also, chasing refunds for memberships you aren’t using in lockdown will save you extra.
- Manage existing debts – consider shifting your debt to 0% balance transfer cards or 0% money transfer cards to avoid paying high interest on existing debts.
- Claim benefits you are entitled to – many have been furloughed, others have lost their jobs. In this unprecedented situation, financial support from the Government may be available to you. Investigate what you qualify for and you can keep topping up those savings.
- Remove temptations to spend savings – setting up a direct debit to move some of your money into a savings account as soon as you’re paid means you won’t even notice the money in your bank account in the first place.
- Make at-home energy improvements/switch providers – many homeowners don’t know how much they’re paying for energy; in fact, according to a recent study by SaveOnEnergy.com/uk, 85% struggle to take a meter reading. Get savvy in this area and you’re likely to find there are many areas you can save in.
- Return items – check out popular apps like Depop and Shpock as well as the regulars. You can also return faulty items to some shops that are closed from the coronavirus. Investigate which and chase the money you are entitled to.
- Take advantage of schemes – due to house price increases, the Government has introduced several schemes to make your first house more attainable – for instance, the Lifetime ISA (LISA) allows you to save up to £1000 a year towards buying a new home.
Florence Codjoe, personal finance expert at Bankrate, also offered her take on the current climate:
“Before coronavirus, 2020 showed great promise for the UK’s housing market.
“But with lockdown severing demand and halting transactions, property specialists at Knight Frank believe the number of sales in 2020 will drop by a staggering 38%, and Savills similarly predict short term house prices will decrease by 5-10%. Concerning, yes, but there are things to look forward to.
“Low house prices work for first-time buyers, and these lower asking prices mean the potential of jumping earlier onto the property ladder.
“This pandemic has shifted our views on what we want in a property, including where we want to live. As a result, more may settle for rural areas and open spaces in the city. If they can.
“For those first-time buyers, continue adding to your hard-earned savings and bear in mind a potentially shaky market. But if you find a great deal, go for it.”