The housing market for the year ahead18/01/21
According to Rightmove, the number of residential properties selling within a week of hitting the market has reached a ten year high. This is undoubtedly in response to the Chancellor’s Stamp Duty holiday, which is due to finish at the end of March. Here in Shropshire we are certainly seeing an increased demand for properties, which, in places, has lead to a price increase too. As well as being due to the removal of stamp duty on properties under £500,000, this is also down to the increased appeal of rural life and green spaces, in the light of our current lockdown lifestyle.
House prices increase
According to Nationwide Building Society, across the country, the average UK house price has jumped 7.3% over the last year to £230,920, after an increase of 0.8% in December alone. The organisation’s report revealed that prices jumped 5.3% since March 2020, which saw the start of the pandemic, after demand surged due to the stamp duty holiday and the national shift to working from home. The report credits the stamp duty boost with bringing forward many people’s longterm plans to move, while homeworking increased demand for larger homes in less densely populated places.
Steady rise in house prices
The pandemic has certainly driven demand and the stamp duty holiday has fuelled it further. However, the economic situation obviously remains delicate. We cannot expect the upward surge in house prices to continue, particularly as the impact of the pandemic continues to be felt and the furlough scheme comes to an end. When the stamp duty holiday finishes there will be an inevitable slump, however we do expect prices to continue to rise gently, and as always, steady progress bodes well for the longer term health of the housing market.
Welsh housing market
Wales has seen less attractive relief to its Land Transaction Tax and it is interesting to note, positioned as our Shropshire office is so close to Wales, that we are certainly seeing fewer Welsh properties coming to the market than we are on the English side of the border, although demand remains at a healthy level.
Housing market for the year ahead
According to Savills, in the early part of the year, transactions and prices are likely to continue to be supported by a combination of a rush to move before both the stamp duty holiday and the current Help to Buy package ends, and an ongoing desire to find a new home to meet immediate requirements.
With the stamp duty holiday due to finish around the time unemployment is expected to peak, we can be fairly certain of a pronounced lull in activity during the middle months of the year. Some of the price gains made may well unwind. However, the promise of an effective vaccination programme is likely to provide a boost to consumer confidence, which should temper the extent of any house price falls.
Working from home is likely to start to tail off as people begin the return to their usual workplace on a more frequent basis. This is likely to result in less urgency to upsize or relocate.
Brexit impact on housing market
We do not believe that, in the short term, Brexit is likely to affect the housing market, given the more pressing pandemic issues. If Brexit causes significant job losses in the medium term, then there may be a slowdown in house prices. While growth may slow, prices will likely not fall or not by much. We feel that the introduction of an effective vaccine programme will provide a shot in the arm for the housing market too. Covid restrictions notwithstanding, our team is busy with mortgage valuations and Home Buyer reports. We have also just appointed a building surveyor to increase our capacity for building surveys still further in order to meet demand, which we anticipate will remain healthy.