The robust nature of the UK property market means that it is more mature and less fickle than some commentators have suggested. In our view, the SDLT concession in itself has not necessarily prompted more people to buy, nor has it directly put upward pressure on house prices, even though last month’s average house price was up 6.4% on the same time the previous year.
People don’t move house to save money on Stamp Duty. They move house because their needs are changing and a different property would suit them better than their current home. But some people did bring their move forward, or became more flexible on their pricing in order to secure a sale or purchase ahead of the March deadline.
In the same way, generally speaking, the tax saving has NOT meant that people pay more for a property – but they might buy a slightly more expensive property than they would have done. But it doesn’t increase the price of the property they actually buy – that’s the agent’s job! House prices have risen due to a rush of pent-up demand, fuelled by confidence in the housing market, caused by high recent demand over supply. In fact, according to Hometrack, there are ten times more new buyers than new sellers currently active. No wonder there’s a feeding frenzy going on.
The question is – is it sustainable? Well whilst a frenzy is never sustainable, there is broad agreement that the market will actually remain pretty steady for the foreseeable future. We’re talking about recovery, not a boom. There is greater political certainty, interest rates remain historically low, mortgage lending criteria are loosening (always a good sign) and unemployment among homeowners is low (remember many of the current Covid-related redundancies are among lower-paid retail and hospitality sector workers, who are typically in rented property). The effect of this is that there might be some pressure on property as a rental investment due to rent arrears caused by the pandemic. But in terms of house prices in general, many commentators have changed their gloomy forecasts are now predicting reasonable growth of between 2% and 5% over the coming year. As a reminder, last year’s house price growth was about 5%-7% depending on where you live.
It’s interesting that, according to Aviva, 19% of current buyers are moving as a result of lifestyle changes caused by the pandemic. Although some of these need room to work from home, 58% say it is because they have just got, or intend to get, a pet! No wonder, the average cost of a puppy has almost tripled in the past year. That’s supply and demand for you! And its exactly the same with property.
With 40% more buyers, but only 4% more sellers than a year ago, now could be the perfect time to sell. So if you have a property that could help to feed this demand then please do get in touch. We’re here to help, and your timing, ahead of the Spring, could be perfect.