There may be some good news for those wanting to get their feet on the first rung of the property ladder.
The coronavirus halted the UK housing market until it re-opened on May 13, leaving thousands of transactions incomplete. As a result, short-term house prices are predicted to drop by about five to ten per cent.
While this is a problem for many home owners, it could mean a small step forward for those saving for their first home.
Mortgage comparison experts give these tips on saving for your first home while in lockdown:
The time taken to save for your first house depends on how much you can put away per month and the size of the deposit you’re aiming for - the average deposit in the UK is around £33,000.
This could be anywhere between two and 15 years for the mortgage you need. Using an online calculator can help you to create a plan, but to further increase your savings during lockdown and beyond, consider the following:
Budget - study your incomings and outgoings closely to determine how much you could save. Consider banking and budgeting apps to help create a sensible budget to follow.
Cut back on non-essential items and chase refunds - consider cancelling some luxuries you don’t really need. Chasing refunds for memberships you aren’t using in lockdown will save you extra.
Manage existing debts - consider shifting your debt to nought per cent balance transfer cards or nought per cent money transfer cards to avoid paying high interest on existing debts.
Claim benefits you are entitled to - many have been furloughed, others have lost their jobs. In this unprecedented situation, financial support from the Government may be available to you.
Remove temptations to spend savings - setting up a direct debit to move some money into a savings account as soon as you’re paid means you won’t notice the money is gone.
Make at-home energy improvements/switch providers - many homeowners don’t know how much they’re paying for energy. Get savvy and you’re likely to find there are many areas you can save in.
Return items - check out popular apps like Depop and Shpock as well as the regulars. You can return any faulty items to some shops that are closed from the coronavirus.
Take advantage of schemes - due to house price increases, the government has introduced schemes to make your first house more attainable - for instance, the Lifetime ISA (LISA) allows you to save up to £1000 a year towards buying a new home.
Florence Codjoe, personal finance expert at Bankrate, said: “Before coronavirus, 2020 showed great promise for the UK’s housing market.
“But with lockdown severing demand and halting transactions, property specialists at Knight Frank believe the number of sales in 2020 will drop by a staggering 38 per cent, and Savills similarly predict short term house prices will decrease by five to 10 per cent. Concerning, yes, but there are things to look forward to.
“Low house prices work for first-time buyers, and these lower asking prices mean the potential of jumping earlier onto the property ladder. This pandemic has shifted our views on what we want in a property, including where we want to live. As a result, more may settle for rural areas and open spaces in the city, if they can.
“For first-time buyers, continue adding to your hard-earned savings and bear in mind a potentially shaky market. But if you find a great deal, go for it.”