Once-in-a-generation moment for housing
COVID CHANGED nothing and accelerated everything,” is a comment I have heard many times recently in relation to property. The pandemic prompted a once-in-ageneration re-assessment of what people want from their homes and quickened the pace of change. The release of pent-up demand after lockdown resulted in the busiest ever half year for transactions in the UK, doubling the average number recorded between 2011 and 2019. Prices recorded their steepest annual rise for 17 years, according to Nationwide. Buyers rushed to take advantage of the stamp duty holiday.
House prices have been defying wider concerns about the economy. But even those worries seem to be disappearing. The IMF upgraded its forecast for the UK with an expectation the economy will recover to pre-pandemic levels by the end of 2021. The stamp duty saving was not the only reason behind the home buying frenzy of early 2021. Many changed their lifestyles, arguably for good. Larger houses and flats outside cities, with space to work and educate from home, as well as good-size gardens (a trend before Covid), are very popular.
Prospective purchasers are spending more time looking at videos, floorplans and photos before viewings, which have become more serious. Confidence continues to be boosted by the easing of lockdown restrictions, record low interest rates and increased availability of high loan-to-value mortgages. First-time buyers have been further attracted by loans requiring five per cent deposit on purchases up to £600,000 as part of the government’s mortgage guarantee or Help to Buy schemes.
However, it is perhaps the shortage of homes in areas of high demand that has been the most significant factor underpinning property prices. Some prospective sellers have been reluctant to move because of fears of infection, exacerbating the supply-demand imbalance but the vaccine roll-out is helping reduce anxiety about opening homes to visitors.
It was no surprise the market paused for breath when the stamp duty concession reduced but it is not expected to be blown off-course. We found many well-motivated buyers who were unable to take advantage previously could still profit from a smaller saving until the end of September, preferring to buy when competition was not so fierce. Low stock levels remain a problem and are supporting prices too. The imbalance should continue even though more people are returning to work at least parttime. We have seen little sign of a price correction or sales falling through, so expect underlying demand and prices to remain solid for some time yet.
Mortgage approvals are still 20 per cent above their longer-term average. Summer has not been quiet although we are not as busy as we were but the trajectory of the market continues upwards.
Many have changed their lifestyles, arguably for good’