After years of post-pandemic boom, the UK property market is going through changes. It has many people wondering if now is a good time to try and get on the property ladder or if it’s better to play the waiting game. In this post, we’ll explore the challenges facing first-time buyers. Then we’ll take a look at why Sheffield could be a viable option for your first home.
Challenges facing first-time buyers
The property market has got off to a rocky start in 2023. The Bank of England recently revealed that mortgage acceptance rates have declined for 5 straight months as of January 2023. Worryingly, mortgage acceptance rates are at their lowest since 2009 (outside of the early pandemic period when the market effectively closed).
Why is this? Well, the decline can be attributed to many different factors. For one, the ongoing cost of living crisis has made it difficult for first-time buyers to save for deposits.
Additionally, fewer people are applying for mortgages because they’re put off by the high interest rates. Likely to offset inflation, the Bank of England has increased its base rate to 4.0%. In turn, this has caused mortgage interest rates to go up. Now even the best fixed-rate mortgage deals usually exceed 5.5%. Also, many lenders have restricted their criteria, so fewer people are eligible for a mortgage.
The last few years saw a real house-buying frenzy due to rock-bottom interest rates and a stamp duty holiday. But now this trend appears to be coming to an end, as evidenced by a decline in house prices for the first time in about 10 years.
Demand in the Sheffield Property Market
According to the Bank of England’s summary of business conditions in Q4 2022, the fall in house prices reflects a supply-demand imbalance. They suggest there is a slowing down in demand from prospective buyers and an oversupply of houses on the market throughout the UK. As such, most offers at the end of Q4 were below the asking price, and house viewings are on the decline.
If you’re looking to sell your house but haven’t had much interest from buyers, you can always consider a cash house buyer for a smooth, cost-free sale.
There is constant debate about what could be around the corner for the housing market. Some experts and house prices indexes are predicting a 10-15% drop in prices over 2023. Others suggest the market is still strong and the current lull is only temporary.
How are things looking in Sheffield?
While Sheffield is not excluded from the current struggles of the housing market, that doesn’t mean first-time buyers should write off their chances of buying a house there.
As it stands, the average price paid for a property in England is £342,297. First-time buyers will be pleased to know that they won’t have to pay anywhere close to that amount for a property in Sheffield.
Different indexes and property companies have slightly different figures for house prices in Sheffield. But going by HM Land Registry data, the average price paid for a property in Sheffield is just £225,560. Other data has this figure closer to the £200,000 mark. And, with the current drop in demand for houses, prices could continue to reduce. Sheffield could be an easy place for first-time buyers to purchase a house because it’s one of the cheapest cities in the whole UK.
In terms of new builds, Sheffield does appear to be undersupplied. Only 2.3% of houses sold between February 2022 and January 2023 were new builds. They are also more expensive than the average Sheffield house, costing on average £249,000 according to market analysts Plumplot. First-time buyers may be better served by targeting established properties in Sheffield. On average, semi-detached houses cost just £220,005 while terraced houses are £184,696. If you fancy buying a flat for your first property, the average asking price is only £156,623.
Despite concerns about slowing demand for houses in the UK, the fact that properties take just 95 days to sell on average is a good indication that the Sheffield market is in a good state. Moreover, 2-bedroom and 3-bedroom homes take an average of just 89 and 81 days to sell, respectively.
First-Time Buyer Options in Sheffield
You could pick up a bargain and potentially pay below the asking price if you keep your ears to the ground and have your finances in order. With plenty of savings for a deposit, you’ll have more options available for a mortgage, and there’s more chance of getting a lower rate.
But if not, don’t underestimate how much help is available to first-time buyers. For one, the government’s mortgage guarantee scheme has been extended into 2023. As a first-time buyer, you can also look forward to a stamp duty exemption. Meaning if you buy a house worth up to £425,000, you won’t have to pay any tax on your purchase. Lifetime ISAs with a government bonus can also help people trying to buy their first home. What’s more, there is the option of shared ownership, a government-backed scheme which involves part buying and part renting a property. This can be a great stepping-stone option for people who desire the security of owning a house but cannot afford to save for a sizeable deposit. It allows you to own a percentage of the house and pay the rest as rent.
Even so, it’s recommended that prospective first-time buyers work on their credit scores, build savings for deposits and consult with a mortgage advisor to learn more about the options available to them. With all the uncertainty regarding inflation and the cost of living, it might be a good time to wait before making a move into the housing market. But as always, talk to experts to give you advice for your specific situation.
Is It Time To Buy Your First Home in Sheffield?
As a city, Sheffield has so much to offer first-time buyers. The local economy, worth over £11b, is in fantastic health. The job market is especially favourable to professionals, with several industries at the peak of their powers. It’s widely seen as one of the best places to start a business in the UK. Sheffield is also one of the greenest cities in the world. Many of its quiet suburbs are ideal for family life. While some areas of Sheffield are pricey, up-and-coming areas like Nether Edge, Walkley and Hillsborough can present excellent value to first-time buyers.
