Meanwhile, at home a reduction to level two restrictions has been postponed for many local authority areas, forcing business specialising in children’s soft-play to remain closed while late-night dance venues across the country have no idea when they will be permitted to reopen.
Yet amid all this uncertainty, within the residential property market it seems to be a case of “Pandemic? What pandemic?”
In a career in property stretching back almost 40 years I have experienced many surges in the market but never in a climate when all the economic pointers should be in the opposite direction. Reductions in LBTT (Scotland’s name for stamp duty) may be contributing to demand at the lower end of the market but does not explain the level of activity higher up the price scale.
Still, we are where we are and, as with past years, the situation is not a good one for anyone seeking to buy their first home. In a rising market they are competing against established owner-occupiers who are confident of selling their current homes – and at a price that will bring a substantial amount of equity. With no such equity and reliant on savings for a deposit, the first-time buyer is doubly disadvantaged.
So should first-timers even be trying to compete in the current market?
The answer will, of course, depend on the circumstance of every individual but for some it might be preferable to wait until the market cools, which it almost certainly will. When that does occur there will, inevitably, be less choice, but first-timers may find themselves in a better position than they are now because not having a house to sell (before being able to make a purchase) becomes a distinct advantage. When there are less people looking to buy vendors are required to look not just at the best price offered but at the ability of someone with a home of their own to sell to complete the purchase. This lack of “baggage” (if you’ll excuse the expression) puts the first-time buyer in a strong bargaining position. Obviously, however, it makes sense to be armed with a mortgage approval, “in principle” before embarking on any search.
Another factor in the favour of many first-time buyers is youth and, as yet, being childless. Therefore they are likely to have the space, physical energy and mental drive to take on a property that older buyers might find daunting. Ideally this would be a “tired” house or flat in a sought-after location which is ripe for refurbishment on a DIY basis. Apart from providing affordable living space, this will almost certainly result in a tidy profit above and beyond that gained by normal house-price inflation when the time comes to sell.
Also, over the past year there has been less need to rush into that first purchase because the availability of quality private rental accommodation has never been greater in terms of choice and affordability. Sadly, this has resulted from a rise in the number of tenants having to end their leases after losing their jobs, despite many landlords bending over backwards to help with delayed or reduced rental arrangements. The situation has been compounded by the collapse of inward tourism which has led to properties – especially in Edinburgh – that were previously geared towards the holiday market being returned to conventional longer-term lettings. A further advantage is that should the opportunity to make that first-time purchase come about quickly and suddenly, a tenant need only give his or her landlord one month’s notice to quit in advance, in writing.
So first-time buyers still have a lot of cards to play – when the time is right.
David Alexander is managing director of DJ Alexander