The UK’s housing market is showing no sign of decline, with the number of sales agreed in March having hit new heights, with buyers taking advantage of Rishi Sunak’s extended Stamp Duty Holiday, which is now continuing until September. According to the latest statistics, approximately 160,000 property transactions went through last month alone, rendering it the highest on record since 2017. And optimistic predictions forecast a continued upward trend in house enquiries.
The continuation of the Stamp Duty Holiday:
The continuation of the Stamp Duty Holiday has been a key element in the latest surge. The intention, to maintain the property market boom during the ongoing lockdown, giving buyers the opportunity to cash-in and save about £15,000 on each projected property up to the value of £500,000. The spike in demand has already seen a completion rate of between 75 to 80 per cent of sales, and it’s probably likely to remain that way until Stamp Duty returns to its pre-COVID status this coming September, with properties once again being limited to the value of £250,000.
The 95% Mortgage Scheme:
Added to this equation is the support for lenders to take advantage of the Government’s backing of the 95% mortgage scheme. This has enabled more sellers to have the confidence to offer these mortgages to prospective buyers, who prior to this initiative, would not have been able to comfortably afford to get onto the property ladder, and lenders were concerned that the buyers could not be trusted to be in a secure enough financial position to complete on a deal. But with this added Government security, more estate agents were now willing to take a gamble on offering the higher mortgage deal, and so drawing in and enticing yet more property purchasers, especially those who had almost given up, due to the loss or diminishing of their earnings, owing to the lockdowns.
The sustained effects of the lockdowns:
COVID-19 has had a huge effect on peoples’ attitudes to housing. Many are re-evaluating their personal circumstances and finances. Regrettably, due to redundancy or having been forced to survive on a lesser income, and also having doubts about job security once furlough comes to an end in September, many have had to dip into their life savings just to get by, with many having to use up what they’d been saving for a deposit on a home. But with both the Stamp Duty Holiday and the guaranteed Mortgage scheme, there was light at the end of the tunnel, and many have been eager to take up the ride.
Housing supply and demand:
Because of these incentives, the influx in demand for housing, (enquiries for properties were up by a potential 34 per cent from this time last year), demand has exceeded supply, and this in turn has witnessed an increase of about a 5.7 per cent rise in house prices. Many buyers are therefore rushing to purchase a home, speculating that the price curve will continue to spiral upwards in the near future.
It is possible, that when these incentives end, housing demand may decline. But with a hopeful gradual return to normality and a strengthening economy, the housing market may be required to counterbalance the pros and cons for the foreseeable future in order to keep the property market booming.