Property experts are reporting an unexpected post-COVID property boom, as the effects of weeks and months of lockdown have made people re-evaluate their lifestyles and priorities and kick-start a market analysts expected to flounder throughout the rest of 2020.
Pre-Brexit uncertainty does not seem to have put people off as a definite seller’s market has evolved, also encouraged by the Chancellor’s recent stamp duty holiday announcement. Demand is currently outstripping supply in the UK as the England, Scotland and Wales property markets shake themselves back into action, with the average asking price in the UK going up by 2.4% to £320,265 from before lockdown, according to property experts Rightmove.
This has gone up from around £300,000 in December 2019, and represents a 3.7% rate of growth in the market, the highest inflation rate seen in the UK since December 2016. Rightmove expects the stamp duty break announced by the Chancellor last month to boost the market further, with the Scotland and Wales markets fully back up-to-speed in the coming weeks also.
Motivation for moving home in 2020
In truth, the 2020 property market was already busy pre-lockdown, but it has unexpectedly picked up where it left off, with buyers unperturbed by the delicate economic landscape. Moving plans have been shifted up the priority list after months of lockdown and the stamp duty bonus – properties of less than £500,000 are exempt from paying stamp duty, a shift from the previous threshold of £125,000, and therefore represents almost all the current market – provides a further motivation for pressing ahead with moving plans.
Ison Harrison’s core region of Yorkshire & Humberside has seen the biggest regional increase in the average asking price, at £204,050, a rise of 5.2% on this time last year. The Yorkshire & Humberside region has seen a 4.1% rise since before lockdown in March, but all areas of the UK are in good health, with the South East seeing the smallest rise in the average asking price at 2.2%.
A further surge in sale agreements has been seen since the stamp duty holiday came into effect in July 2020, but some analysts are preaching caution, as the Rightmove reports are in contrast to other figures being released. Nationwide claim that house prices fell in June for the first time in eight years, whilst Halifax reported four consecutive monthly falls in house prices. Meanwhile, the Office for Budget Responsibility predicts that house prices could fall by 2.4% in 2020, and by 11.7% during 2021, and this is under their best-case scenario.
It seems that perhaps the current surge in demand could be a consequence of unusual circumstances, rather than a natural spike. The stamp duty announcement and post-COVID uncertainty has maybe produced an unusual and somewhat fabricated situation. It is perhaps wise not to expect this surge of interest to last long term. Many analysts are suggesting caution is shown, but certainly with many families and workers re-assessing their priorities and perhaps setting up to work from home from now on, there is undeniably much current interest in new property, and that won’t change in the short term.
Government moves for boosting the property market
Ison Harrison’s conveyancing experts were also intrigued by further Government announcements made recently, aimed at accelerating growth in the property market. These include a relaxation of planning laws enabling homeowners to add up to two storeys to a detached property without the need for full planning permission. Coming into effect in September, the move is part of an overhaul of “outdated and bureaucratic” planning laws and will also allow a speedier approval process, cutting this from “eight to 16 weeks” to “up to eight weeks”.
In addition to the stamp duty holiday, Chancellor Rishi Sunak also announced a Green Homes Grant Scheme, with the Government providing vouchers for energy efficiency improvements in the home. The Government will provide two thirds of the cost of this work, up to a maximum of £5,000, and this will help the Government meet its nett zero carbon emissions target for 2020 and will also be introduced from September 2020.