First-time buyers are set to be outnumbered by home movers by the end of the year, as fewer high loan to value (LTV) mortgages and the recession impact the market.
The proportion of first-time buyers has risen over the last decade and outnumbered movers in 2019, according to research by property listings site Zoopla.
However, this trend is set to reverse in 2020 and through to the beginning of 2021 because of the impact of Covid-19.
Demand from first-time buyers cooled in June, correlating with mass withdrawal of higher LTV mortgages from the market, Zoopla found.
At the same time, demand from existing homeowners is 37 per cent above pre-Covid levels.
The search for space, a “once in a lifetime re-valuation of what a home is worth” and the stamp duty holiday have helped pushed homeowners into moving, according to Zoopla.
And a large portion of existing home owners have either no mortgage or smaller loans so affordability is less of a barrier than for first-time buyers.
The divergence between the two groups is most prominent in the South East, Scotland and the South West.
The activity from movers is stimulating more supply which is coming to market at higher prices, according to Zoopla.
House prices are up 2.6 per cent year on year, up from one per cent a year ago, with sales agreed running three per cent above those achieved in 2019.
Zoopla predicted another spike in the property market in line with an increase of coronavirus cases and tightened social restrictions from the government.
Richard Donnell, research and insight director, Zoopla, said: “Housing market conditions remain strong as new restrictions are introduced to control the spread of Covid.
“These changes are likely to continue to support housing demand in the near term as the importance of the home grows. However, the housing market will not remain immune to the impacts of weaker economic growth and rising unemployment.
“A change in the mix of buyers is supporting market conditions with sustained demand from equity rich existing owners seeking more space and a change in location.
“In contrast, first-time buyer demand is weakening. FTBs have been a driving force of housing sales over the last decade. They remain a key buyer group but lower availability of higher loan to value mortgages and increased movement by existing home-owners means a shift in the mix of home buyers into 2021.”