We took a look at our internal client data throughout 2020 to see how home buying patterns changed during the year of Covid-19.
As we all know, the coronavirus pandemic had a drastic impact on the property sector from the get-go. During the first lockdown, the housing market was effectively suspended, with prospective buyers unable to view properties. The government has since looked at ways to stimulate home buying, including the Stamp Duty holiday and support for 95% mortgages.
But what was the overall impact on home buying in 2020? How did the number of conveyancing enquiries change? And were different types of buyers affected differently?
At Bird and Co, we wanted to find the answers to these questions for ourselves. So, we looked at all of the transactions our conveyancing solicitors handled throughout 2020 to see what conclusions we could draw.
From the statistics collected, we have gathered some key insights into the home-buying sector, and we’ve broken them down for you, here. Take a look…
Key Home Buying Statistics 2020
- 72% of Bird and Co clients in 2020 were first-time buyers.
- Over 28% of enquiring buyers in 2020 owned another residential property.
- Over 35% of 2020 buyers who enquired were not buying the property as their main residence.
- Enquiries decreased by 77% between Q1 and Q2 of 2020 due to the pandemic.
- Between October and December 2020, 85% of homes were not sought as the buyers’ main residence.
- 4/5 of homes in Q4 were being purchased as someone’s second residence.
- 15% of homes in 2020 were purchased as a holiday let, HMO, or rental property.
Home Buying Statistics Early on in the Pandemic
When the pandemic broke out in early 2020, we soon went into a national lockdown. This almost completely shut down the conveyancing and home-buying sector, but to what extent?
The first couple of months of home buying in 2020 were fairly normal, with around 243 of our 2020 clients looking to buy in Q1. Then, things slowed down come April, with just 56 intended purchases in April and May combined. This represents a 77% decrease between Q1 and Q2.
Our statistics continue within the pattern of the pandemic, with enquiries increasing to 131 in June. Of course, this ties in neatly with the lockdown easement at the end of May 2020.
From then onwards, and continuing on through to December, the number of enquiries averaged to around 130 a month. Clearly, as expected, the property market was heavily affected by the ups and downs of lockdown life.
Second-Time Buyer Statistics 2020
For those buying homes for the second, third, fourth etc. times, the picture looked more positive than ever in 2020.
Despite the disruption in services during the early months of the year, when services picked back up again these types of buyers were booming. More specifically, our statistics show that:
- Over 28% of enquiring buyers throughout 2020 already own another residential property.
- Nearly 13% of 2020 buyers had a partner who already owned another property.
- Over 35% of enquiring buyers throughout 2020 were not buying the property as their main residence:
- 13% of enquiring buyers’ homes were purchased for letting.
- 1% of enquiring buyers’ homes were purchased as HMOs.
- 1% of enquiring buyers’ homes were purchased as holiday lets.
In general, across the year, over 1/3 of Bird and Co’s clients were second-time buyers, whether this be for rentals or holiday homes. So, within the Bird and Co. demographic, that’s over 1/3 of properties being taken off the market as rentals or second homes.
Majority of Home Buyers at the End of 2020 Were Second Home Buyers
The most shocking statistics we saw was revealed after asking: “Are you intending to occupy the property as your main residence?”
Results from this showed that from January 2020 to September 2020, those not buying their new property as their main residence maintained an average of around 19%. However, from October to December, this percentage skewed to a whopping 85% of homes not being purchased as the main property.
That’s over 4/5 of homes being purchased as someone’s second residence during Q4 – a 66% increase between Q1 to 3 and Q4.
These effects are particularly evident in November 2020, where 90% of Bird and Co. enquiries were for non-main residences, compared to the steady average in 2019 of 70% across the year.
At first glance, this skew could be attributed to pent up demand after the lockdowns earlier in the year, which saw a highly reduced rate of home-buying enquiries. It could also be due to the Stamp Duty holiday, which began in July 2020. This has increased demand for second-time buyers, who have been looking to make the most of these reduced rates.
Because of Stamp Duty first-time buyers’ relief, the holiday has not really helped first-time buyers, leaving them on the backburner. To add to this, there are plenty of other reasons that may have skewed the weighing scales in the favour of second-time buyers. These include:
- The overseas buyer Stamp Duty surcharge coming into effect in April 2021, which non-UK investors will want to avoid.
- A change in priorities due to lockdown, which might have led to home owners looking for houses further into the countryside, with office space and larger gardens.
Skew in Main Residence Purchases in 2020 Compared to 2019
When compared with the 2019 statistics overall, this main/non-main residence skew is pretty common across a general year. So, despite the Q4 increase, the 2020 year on average varied greatly from the previous year.
In fact, where the average percentage of homes being purchased as a main residence in 2020 was just under 65%, the average in 2019 was around 29%.
Clearly, in a ‘normal’ year unaffected by Covid-19, far more buyers look to purchase for renting, HMO, or holiday let purposes. However, overall, the first 3/4s of 2020 saw a much greater percentage of main residence buyers than usual.
It’s clear that Bird and Co clients saw main residence purchases as a priority in 2020, compared to the previous year. From this, we may conclude that lockdown changed peoples’ priorities in terms of house buying.
Landlords Still Dominating a Large Chunk of Homes
Of Bird & Co’s 1,204 conveyancing clients in 2020, 14% were buying a buy-to-let (with 13% buying a whole letting and 1% buying an HMO). In 2019, the percentage of buy-to-let buyers was 13% (with 12% buying a whole letting and 1% buying a part letting).
These statistics show that the buy-to-let sector has held up despite the Covid-19 pandemic and an increase in main residence buyers.
However, overall, there’s still a clear disparity between second and first-time buyers. Taking a further look into this disparity, our statistics have highlighted some key problems…
First-Time Buyer Statistics 2020
Our statistics definitely show that the majority of buyers are, in fact, first time buyers. In fact, almost 72% of buyers in 2020 didn’t own another residential property when they solicited Bird and Co’s services. This is a similar story to the previous year, in 2019, when around 71% of prospective clients were first-timers too.
That said, as we can see, there’s still a huge proportion of buyers who already own a residential property. Whether they’re second-time buyers, or landlords looking to start or continue their property empire, there’s a large chunk of homes being taken off the market.
What’s more, it’s clear to see that buying habits have not changed over the past year, despite government schemes. Let’s take a deeper look into this…
What Government Housing Schemes Were Available in 2020?
Throughout recent years, a number of schemes have been available to encourage first-time buyers into the market. In March 2020, these schemes were:
- Help to Buy Equity Loan: this scheme targets new build properties, and is where the government lends you up to 20% of the cost of your new-build home (40% in London). So, buyers only need a 5% cash deposit and a 75% mortgage to make up the rest. It was extended numerous times during 2020, with the aim to prop up the first-time buyer market and a new scheme started in April 2021.
- Shared Ownership: where you buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share. You can also buy additional shares (called ‘staircasing’) until you own 100% of the property.
With each of these initiatives, the aim is to help more young people get onto the property ladder. However, is this having the intended effect?
Government Schemes to Help First-Time Buyers Have Had No Effect
The government have championed the above schemes as instrumental in improving the picture for first-timers in the housing market. However, experts in the field have questioned whether these schemes are too little too late.
These initiatives have been in place for a number of years so, if they work as well as intended, we would expect to see the percentage of first-time buyers rising. In reality, this is absolutely not the case.
Our statistics demonstrate that the picture for first-time buyers over the past year has not improved. This is clear from the unshifting percentage of buyers, between 2019 and 2020, who are second- or more -time buyers.
This is also corroborated by the fact that most homes being purchased in 2020 were older homes, not new-builds. If the government schemes were working, we would expect to see a rising number of new builds being snapped up.
Although there is a slight increase in new builds being purchased in 2020 than in 2019, this increase is only a 2%. This is simply not enough to demonstrate that the help-to-buy scheme has had a huge effect.
What Should Governments Tackle Instead?
With the continued struggles of first-time buyers, it’s clear that the ongoing schemes aiming to tackle these problems are questionable. Truly, there are much more fundamental changes that must be tackled before the picture improves. These include, but are not limited to:
- Unaffordable housing.
- High living costs, making saving difficult.
- The lack of homes available to purchase, which does not meet the current demand.
- Mortgage lenders being sceptical of lending to people when they’re paying just as much in rent.
- Limited high loan-to-value products (the government introduced a mortgage guarantee scheme in April 2021, but it is too early to tell whether this will have a positive effect).
Has Lockdown Altered Home Saving Habits?
What’s also interesting to see is that the Covid-19 pandemic has, as of yet, had no direct impact on the number of first-time buyers hopping into the market.
Many have postulated that the pandemic will have changed the picture for young people, who have previously struggled to save up the money to purchase their first home. After all, the pandemic has allowed people to save on travel and eating out.
The truth is that the picture for first-time buyers is so bleak, and the pricing so unattainable, that the pandemic has not had this effect. This is demonstrable, again, from limited difference between the percentage of first-time buyers between 2019 and 2020.
This compounds the fact that the underlying problem for home buyers is the lack of affordability all-round.
Looking Ahead to 2021
Looking back to 2020, it’s clear that the glaring issues within the home-buying market still lie between first-time buyers and everyone else on the property ladder. In fact, as our 2020 home buying statistics demonstrate, there’s still a long way to go before this disparity ever decreases.
Ultimately, despite government attempts to change the picture, our insider stats demonstrate that it’s having no fundamental effect. Second- and more -time buyers are still snapping up many properties, and filling the market with more rental homes. This is boosting the competitive nature of the rental market, thus increasing prices left, right, and centre.
The domino effect this is then having on affordability of homes, as well as life in general, makes saving for a home continually difficult. As ever, the 2021 property market needs a huge overhaul before we can tackle the home buying barriers for our young adults today.
If you’re looking to buy or sell your home in 2021, feel free to get in touch with the team at Bird and Co by calling 01636 349175. Alternatively, head to our website, at birdandco.co.uk, for a conveyancing quote. We look forward to helping you find your dream home.