In May 2020, having been in a national lockdown since March 2020, nobody could have forecast how the housing market would end up a year later.
The government ordered a temporary freeze on the housing market, with no property viewings or house moves allowed. Because of this, it was predicted that there would be about a 32% cut in house sales, suggesting about 520,000 house transactions being put on hold, which would inadvertently have a huge knock on effect for the housing economy, both for buyers and sellers.
Because of the impact of the pandemic, many prospective buyers declined to proceed with purchasing a property or were forced to cancel, with the fear of a reduced income, or indeed a complete halt to their income, due to the possibility of job losses, and a very uncertain future. So this meant that there was a sudden increase of available properties on the market with a decrease in buyers. This standstill more or less stabilised house prices with very little cost difference to the year before.
Prices begin to rise.
The housing market has always been a major factor as part of an economic recovery, and in order for this to gain momentum, the government needed to get the property market moving again. So the Stamp Duty Holiday was introduced to give it a boost by helping buyers who were hit financially due to COVID. So as the first lockdown was coming to an end, the Stamp Duty Holiday would continue until September to allow those already having started the purchasing process to proceed with more confidence, and first time buyers could take advantage of the approximate £15,000 saving. This was great news for sellers, and with new COVID secure virtual property viewings now put in place, estate agents were eager to get sales going again, and with this sudden increased demand for housing again, the prices of properties also rose by as much as 5.3%.
Prices continue to rise.
To further push the property market forward, a Government backed 95% mortgage scheme was introduced, which certainly added a boost to an already increasing rise in property sales from the Stamp duty Holiday. This mortgage scheme would now allowed those with not much money put by to be able to afford a 5% down payment, and those wishing to up-size to be in a better financial position to do so. This scheme also increased confidence to sellers who could now afford to offer these mortgages, in the knowledge that they’d have the Governments’ support should anyone default on their payments. This encouraged yet a further demand for housing and realising this, sellers obliged by raising the value of their properties.
Prices forecast to stay on the increase.
What a year! With help and incentives from the Government, and the lockdown rules on track to be ending in June, the mood of the country is increasingly positive. The pandemic has seen many people re-evaluating where they live, and with some continuing to work from home on a permanent basis, many have made home improvements to gain extra space which has added extra value to their properties. Other people are looking for a greener space or larger accommodation, and all these reasons for a change in lifestyle and a new way of living has meant that supply cannot possibly keep up with demand. This has predestined an all-time record high for houses being sold for a higher price,(an unparalleled one in three) in the last month, with the average house now valued at around £256,405, and the prediction is that this trend will continue into the near future.