The pandemic has been a key driver of house prices, and spending more time indoors has changed the requirements of those looking to buy a home. It can be argued that the stamp duty holiday was the main driver for the huge surge in activity we’ve seen over the past 12 months. I would personally challenge this view and say that the lockdowns we have all experienced over the past 18 months have resulted in home owners re-evaluating what it is they want/need from their home.
Homes with four beds or more have seen a 39% surge in sales and 15% fall in numbers coming to market versus 2019, resulting in an average price hike of 6.7% in the last six months
Mass-market three bed sector sees 28% jump in sales while suffering 10% drop in new supply versus 2019, with prices jumping up by 6.9% so far in 2021.
In Nationwide’s house price index for May they stated, the driving factor for homebuyers this summer is to acquire more space, or a bigger garden.
Amongst homeowners surveyed at the end of April that were either moving home or considering a move, more than two thirds (68%) said this would have been the case even if the stamp duty holiday had not been extended.
There is now a ‘race for space’ which continues to drive demand. Of those moving or considering a move, around a third (33%) were looking to move to a different area, while nearly 30% were doing so to access a garden or outdoor space more easily, according to an online survey of consumers.
The distortive effect of the pandemic and the stamp duty holiday combined have contributed to double-digit house price growth in the UK. Despite all of this, we have seen a ‘wait and see’ attitude among some, contributing to lower levels of supply in 2021 as sellers were put off entering the market.
This hesitation on the part of sellers clearly highlights how people crave stability. The second half of this year should see healthy levels of activity in the UK housing market. There is frustrated demand in the system, new supply is starting to increase and the labour market is stronger than most economists predicted six months ago.
So if you are reading this and are still on the fence as to whether now is the right time to make the big move, perhaps we can ease some of your concerns.
With the first half of 2021 seeing 140,000 more sales being agreed and 85,000 fewer new listings than the long-term average, this surge in activity has revealed a shortfall of 225,000 homes for sale which, if available, would have corrected this stark imbalance between supply and demand, and would have stabilised price growth. There were 12 new prospective buyers for each new instruction to sell in the UK in May.
Interest rates were cut to 0.1% in March last year and kept there.
Resulting in UK banks and building societies being able to borrow money cheaply from the Bank of England so they can keep the rates they charge their customers low.
The Bank of England is also supporting the UK economy through quantitative easing. This mainly involves them buying government bonds. This helps to keep the interest rates on mortgages and business loans in the UK low
UK consumers have saved over £203 billion during lockdown. British households increased their savings sharply in early 2021 as a return to lockdowns prevented them from visiting bars, restaurants and many shops, potentially boosting their spending power. UK savings rate jumps to 19.9% in Q1 vs 16.1% in Q4.
Consumer spending is expected to be the main driver of this year’s economic rebound. The release of pent-up demand with restrictions eased and the rapid vaccine rollout is forecast to drive the strongest growth in spending since 1988, as consumers spend some of their ‘unanticipated’ savings accumulated during lockdowns
Busiest ever first half of a year pushes average price of property coming to market to a new record high for fourth consecutive month, and £21,389 higher (+6.7%) in just six months. In our area, we’ve seen a yearly increase of 8.2% some 1.5% higher than the national average. Given the easy access into London in less than an hour via our mainline train stations, our market has seen a surge of interest from those living in the M25 and London regions who no longer need to be in the city on a daily basis.
Unemployment is forecast to peak at 5.5% in the autumn, a significantly lower figure than expected at the start of the Covid pandemic in March 2020 which combined with all the above factors bodes well for a prolonged strong property market.
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