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2018 looks positive for first-time buyers

First time buyers6

January is a time for new starts and looking forward to what the next 12 months will bring. If this means buying your first home then it looks like 2018 could be a good year for you.

So, why do things look good for first-time buyers looking to take the first step onto the property ladder this year? Well, there are a number of trends that will seemingly make buying a new home that little bit easier and more affordable.

More new homes

Towards the end of 2017 figures indicated housebuilding had reached a peak last seen nine years ago, with 217,000 additional homes entering the market in 2017, a considerable increase on 2016 figures.

These additional new properties have taken some of the pressure off the housing market, which has limited house price increases, making new homes more affordable for first-time buyers. Many predictions indicate pressure on housing supply will reduce even further as more homes are built, following the support for housebuilders announced by the chancellor in his November Budget.

Stamp duty cuts

While there has been significant debate about how effective the first-time buyer stamp duty cut will be, the simple fact is the abolition of the tax has provided improved conditions for first-time buyers.

The move is expected to save 80 per cent of first-time buyers up to £5,000, which will come in very handy when it comes to signing on the dotted line for a new home.

Interest rate stagnation

While interest rates were increased for the first time in a decade at the end of 2017 and another 0.25 per cent increase is expected in the early months of 2018, there is still hope for first-time buyers when it comes to interest rates and their impact on mortgage lending.

An increase to an interest rate of 0.75 per cent will have a minor impact on tracker mortgages, but the majority of first-time buyers will plump for a fixed rate mortgage that will not be impacted by rate rises. It is predicted that mortgages will remain accessible and affordable for those looking to make their first move onto the property ladder.

To take a look at the latest mortgage deals, use our mortgage calculator, created with the Mortgage Advice Bureau.

Buy-to-let investment waning

In recent years first-time buyers in many regions have been locked in a battle with buy-to-let investors for traditional start-up homes, which has seen people lose out on their first homes. However, 2018 looks set to be different, thanks to a reduction in landlord investment.

The Council of Mortgage Lenders believes less than 80,000 homes will be purchased using buy-to-let investment in 2018, much lower than the 120,000 recorded in 2015. Much of this is down to increasing taxes on landlords and tougher lending criteria for those looking to rent out a property purchase.

These conditions, combined with the end of stamp duty, the limited impact of interest rate rises and the increased rate of construction, should give first-time buyers the advantage once again when it comes to buying a new home in 2018.