Upward House Price Trend May Fade When Government Support Ends

Believe it or not, despite Coronavirus lockdown and the instability many feel because of a potential no-deal Brexit, house prices are rising more quickly now than they have at any point in the last 5 years.

If you’re thinking of buying or selling property in the United Kingdom, you could be forgiven for wondering whether now is a good time to make a move. What with all the goings on in the world, there is more than a degree of uncertainty in terms of jobs, house prices and investments, meaning that thinking things through is more important than ever before.

What we look at here in a little more detail is the wisdom of buying or selling property in the current climate. There’s a lot happening from Covid to Brexit to stamp duty support to consider, so there’s a lot of food for thought. So, without further hyperbole, let’s see where things lie.

House Prices Are Surprisingly Strong Right Now

Believe it or not, despite Coronavirus lockdown and the instability many feel because of a potential no-deal Brexit, house prices are rising more quickly now than they have at any point in the last 5 years. Interestingly, part of the reason behind this is that more people are looking for more spacious homes, as many feel that lockdowns are going to the norm going forwards.

Another contributing factor is the government-backed stamp duty holiday that runs until the end of March ‘21, as home buyers are currently saving thousands of pounds on the cost of buying a new home.

The average prices of a UK home is now just over £227k, which equates to a rise of just 6% from the same point last year and a month on month increase of 0.8%, according to Nationwide Building Society figures.

Stamp Duty Saving Thousands for Homes Under $500K

Chancellor Rishi Sunak introduced the stamp duty holiday to provide a boost to the Covid-hit UK economy and it’s effect shouldn’t be underplayed. What was originally intended as a fillip to get the housing market back on its feet actually ended up propelling it forwards at a rate of knotts.

Now, with this concession set to end on the 31st of March next year, there are fears that this will bring the buoyancy in the housing market to a grinding halt. That’s hard to see right now, as there are reports that the mortgage and local search processes are actually taking longer than usual due to the surge in demand. But according to some, it might be coming.

Mortgage Applications Approvals Are Flying Too

Another indication of the strength of the Covid lockdown UK housing market is the fact that the Bank of England stated earlier this week that approvals for home mortgage applications were higher in September of this year than they’ve been since 2012. Surely just the kind of boost to confidence any would-be home seeker or seller needs right now.

However, before we get ahead of ourselves, there have been indications that some home seekers intend to back out of home buying transactions in 2021 if it seems that their purchases won’t go through before the March deadline. A factor that represents something to seriously think about if you’re hoping to act in the market next year!

The Stamp Duty Deadline is a Concern - Mark Harris

The importance of the stamp duty holiday deadline is echoed by SPF Private Clients chief exec’ Mark Harris, who said that the impending cut-off date is something that the government needs to be looking at and confirmed that the minds of buyers do seem to be focused on getting their deals through before the cut-off date and saving money as a result. 

Whilst a slow-down of the market is by no means set in stone, it would be understandable, as we’re talking about people no longer saving what is a considerable sum at a time when money is short for many. How much of the current demand is short-term and down to stamp duty is not clear, but the majority of analysts seem to think that a weakening of the market is inevitable.

Service Levels Are an Issue For Borrowers During Covid

The problem that home buyers are facing at the moment is two-fold. Firstly, there are possible problems lurking in the labour market which are causing uncertainty with regards to making mortgage payments. Many businesses have spent much of the year inactive and propped up only by the furlough scheme. Not only that, but the ability to actually get a mortgage through in the short term is also proving tricky.

The reason behind this is difficulty lenders are having in maintaining service levels with a drastically reduced workforce being allowed into work. Combined with the rise in customer demand at this time is causing something of a bottleneck, leading to borrowers choosing deals with quick lead times, with criteria and price deemed less important.

An Interesting 2021 Ahead For the Housing Market

We wish we could provide you with some concrete advice about the housing market in the coming year, but there are a lot of variables at play, making it very hard to commit one way or the other. Both home buyers and sellers have a lot to think about and not a lot of time to think about it, especially when talking about taking advantage of the stamp duty concession.

There very well could be a weakening in home purchases and house prices after the end of March, but it’s by no means a foregone conclusion, particularly as Spring is historically a time when people get out there and start buying homes again. When people’s minds start to turn again to outside spaces and garden barbecues (even during Covid) it’s bound to have an effect, but we will have to wait and see.

At FS Properties, we have a dedicated team with a wealth of expertise across the whole spectrum of the property market. From building conversions, to permitted developments to new-build land opportunities, we have the skill and know-how to fully manage every aspect of the process for our clients across London.

If you would like to know more about us, you should visit us online at www.fsproperties.co.uk where you’ll find details about our team, our ethos and our values. Alternatively, if you would like to speak to us directly about your precise property needs, our expert team can be reached by calling 020 8771 3787. 

They’re ready and waiting to help to assist you in any way they can. Thanks for reading.

We’ll be back with more from the property world again soon.