Coronavirus UK: could falling property values create opportunities for first-time buyers?

PUBLISHED: 08:55 22 May 2020 | UPDATED: 08:55 22 May 2020

Falling house prices could create a good opportunity for first-time buyers, says Peter Sharkey. Picture: Getty Images

Falling house prices could create a good opportunity for first-time buyers, says Peter Sharkey. Picture: Getty Images


As house prices tumble, first time buyers have a chance to get on the property ladder, says finance expert Peter Sharkey.

Our simple morning constitutional has become a wonderfully routine feature of daily life, a chance to greet fellow walkers, enjoy the fresh air, admire the scenery and among other topics, discuss where we’ll head on holiday once lockdown restrictions are lifted.

We’ve already covered a number of possible long haul destinations and earlier this week, my wife, Clare, and I were mulling over the attractions of hiring a motor home and travelling around Europe, perhaps stopping at a few places we already know and taking time to visit some new ones too. The prospect of spending a few weeks on the road sounded very attractive.

Clare nodded in agreement. “Wherever we go,” she said, “what I’d really like to do is sit on a sunny café terrace, preferably overlooking the sea, and enjoy a coffee while watching the world go by.”

I suspect millions of people think likewise. How we crave normality: how we miss the ordinary and commonplace; what simple joy they can bring . It’s only when something we took for granted is taken away do we appreciate how much it means to us.

I would place the fairly routine process of buying or selling a home into this commonplace category and although this too has been on hold, with estate agents only recently allowed to open, it could be a while before it returns to normal.

Earlier this year, estate agents Savills estimated there would be around 1.2 million property transactions during 2020, a figure which equates to roughly one person in every 58 of us moving home. Of course, that forecast was BC (before coronavirus) and, not surprisingly, last month it was revised downwards: the agency now expects transactions to fall by as much as 40pc, to 566,000.

Last week, Savills announced that they expect house prices will fall by between 5pc and 10pc in the short term “…as buyer confidence is weakened by the Covid-19 pandemic”.

Should we experience a prolonged economic downturn which further weakens consumer sentiment and results in higher unemployment, those figures could be due a further revision.

On top of this, mortgage availability has been slashed with loans catering for applicants seeking higher loan-to-value (LTV) products being particularly hard hit. Many banks will no longer lend more than 65pc of a property’s value.

It’s a situation would-be first time buyers find frustrating.

On the one hand, house prices have fallen, creating a rare opportunity for first time buyers to get a toehold on the property ladder. However, most first time buyers tend to need larger mortgages. It’s difficult enough saving a deposit in the hope you’ll secure an 80-85pc mortgage, but when LTV percentages are slashed to 60-65pc, many younger folks could be forced to save for much longer before they can afford their first home.

‘What about the Bank of Mum & Dad?’ you ask. Good question unless they have to cash in some of their savings (or access their pension) at a time when stock markets have also taken a hammering.

There is, however, a possible solution: equity release, a process that has become increasingly popular over the past few years.

As a huge number of homeowners aged 55 and over have spent years making mortgage repayments, so the equity within their property has been building.

By releasing a proportion of this equity, the homeowner’s loved ones (the first time buyers) may use some of it to plug their funding gap and obtain a smaller property loan from the bank. Moreover, it’s an arrangement that doesn’t require Mum and Dad to cash in a penny of their savings.

The most popular means of releasing equity is to use a lifetime mortgage. This allows homeowners aged 55 and over to receive a proportion of their home’s value as a tax-free lump sum, but also ensures they remain the sole owners of their home. An added attraction is the fact that there are are no monthly repayments to make.

Equity release isn’t for everyone, not least because it could compromise older homeowners’ entitlement to means-tested state benefits and reduce the value of their estate. Nevertheless, as a means of helping loved ones take advantage of a rare fall in property values, many folks who have themselves benefited from the steady rise in property values over the past few decades are likely to deem it worthy of further consideration.


In light of the current crisis, readers may wish to learn more about equity release. You can read hundreds of blogs and articles dealing with the subject on the Moneymapp website, including the UK’s leading equity release blog at:

In addition, there’s a wealth of information to be discovered at: .

Alternatively, if you have any queries regarding equity release, please email your questions to:

Please note, cannot advise readers on whether equity release is suitable for them.

Alternatively, for further details and to arrange an appointment with a qualified adviser, please call FREE on 0800 188 4812 and quote reference LIFEM1, or email us at:

For more financial advice, check out Peter Sharkey’s regular column, The Week In Numbers.

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