2020 has been a challenging year for many industries, and the housing market was hit hard. Without any way of conducting house viewings, sales were frozen for several months, leaving buyers and sellers in a state of limbo.
Property Market UK
Since it reopened, all the pent-up market demand has been flooding out, and despite the economic downturn, the property market has been more buoyant than ever. In October housing prices reached a five-year high with the number of mortgage approvals also rocketing. This has been a much-needed boost for the market but will the current positivity wane? And will COVID have a more significant impact on prices than is being seen now?
Here’s a closer look at the facts of UK house prices.
Slash in property Stamp Duty
Without question, one of the factors influencing the surge of property sector sales is the government’s decision to announce a stamp duty holiday. It means that on purchases up to £500,000 no stamp duty will be payable, a move which could save buyers thousands of pounds.
This is only a short-term measure which is due to end in March 2021. Given the fact that this tax break will only be in place for a matter of months, buyers have chosen to move now rather than wait.
Experts believe that if the stamp duty holiday ends in March as previously planned, there will be a sharp drop-off in the housing market and property prices from April 2021 onwards. Coronavirus is and has had a major effect on housing markets, house prices, and mortgages.
Key property Indicators
Approximately one million jobs have been lost in the UK due to COVID so far, and it’s anticipated that a further million will be lost in the coming months. This coupled with a severe recession, and an ongoing global pandemic means that the economy is facing some of its darkest days.
Despite this, the critical indicators for the property market are not showing too many signs of depression. Job losses and a recession traditionally have an impact on the housing market, but at the moment, it’s holding firm.
In October 2020, 105,630 housing sales were recorded. This is the highest number seen since 2016, hardly the marker of an industry in a slump. Prices are on the increase too. Indexes tracking both sold and asking prices show month-on-month and year-on-year growth.
Unexpected market Interest
One of the things that has come out of the COVID crisis has been the desire for change. People have experienced a new way of balancing their work and home life, and many are seeking a more permanent switch.
With more companies offering working from home as a long-term solution, home-owners are looking for more space. Without the need to commute every day, being close to train stations or major commuter routes has become less of a priority.
House prices since covid
All of this has meant that there’s been a surge in interest in properties that have more outside space and are away from the traditional commuter zones. The pause in the chaotic modern lifestyle has given many people time to reflect on what they really want, and how they want to lead their lives in the future. Moving to a new home is a large part of this and has contributed to the current appetite in the market.
UK house forecast
Although everything is looking rosy in the housing market right now, many believe that the full effect of COVID is not yet being seen. When the stamp duty holiday ends in March 2021, the market is expected to falter, especially when combined with the anticipated further job losses. Predictions vary for the medium to long term, but all agree that in 2021, you shouldn’t expect to see anything more than modest growth at best, and in a worst-case scenario, there may be a hefty drop in prices. Contact us and discuss how we can help you.