Over the last few years there has been constant concern about first-time property buyers with the worldwide recession, banks unwilling to enter even the most remotely risky investment and property prices moving out of the reach of many first-time buyers. As a consequence many people forecast that the worldwide property market would suddenly grind to a halt, due to a lack of new blood from the first-time buyer arena, but perhaps we have the answer in those looking to downsize their properties?
There is more and more evidence that as homeowners get older they are now looking to downsize their properties, use their capital more wisely for the future and basically protect their retirement. Could those looking to downsize their properties effectively become the first time buyers of the future?
Effect of first-time buyers
When the worldwide economy was riding high, property prices were increasing around the world and household incomes rising, first-time buyers were the lifeblood of the property market. Not only do they add additional capacity and demand to the property market but they also allow property owners to upsize when their financial situation allows. By taking up the slack on the “smaller” properties they then release the chain of buyers which reverberates right across the industry.
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Over the last few years we have seen house prices move out of the reach of many first-time buyers, banks unwilling to enter even the most remotely risky of transactions and many first-time buyers moving towards the private rental market. Whether this will change in the future remains to be seen but with house prices rising quicker than household incomes it is difficult to see any significant change in this particular situation in the short to medium term.
Even though the worldwide economy is still struggling to push ahead, there are some markets around the world which are proving to be fairly buoyant and some economies have performed better than others. As a consequence, while there are people looking to downsize their properties, perhaps when looking towards their retirement, there are also many people looking to upsize and take advantage of their own financial situation.
It will be interesting to see what impact those looking to downsize their property have in the short to medium term, with a recent survey by Lloyds bank indicating 45% of those looking to sell within the next three years are looking to downsize. This is a situation which is not unique to the UK and one which is likely to be replicated across many property markets around the world. Even though we are in very difficult economic times at the moment, many people have made a significant return on their property investments over the last 30 or 40 years and the opportunity to downsize, take out capital to use elsewhere and look to the future is a godsend.
While first-time buyers have been, and always will be, one of the more vital elements of the worldwide property market it is interesting to see the growing number of people now looking to downsize their properties over the next three years. There is every chance that those looking to downsize their properties could take up the slack from a lack of first-time buyers until worldwide property becomes more affordable again?