Thanks in a main part to the eight-month stamp duty holiday which means there is no tax to pay on homes priced £500,000 or less until March 31 next year, the market has seen a huge boost in the number of deals made and impressive annual property price growth of 5% increases year-on-year rate with a new record for average house prices and a thriving market, which is all great news for investors. In July, buyer enquiries were up 75 per cent compared to the same period last year with a significantly higher proportion of homes under offer too, in comparison to the same period in 2019.
We always encourage our investors to think in the long-term as things can change quickly. As we look ahead to the housing market after the stamp duty holiday ends, the good news is that current positive market movement appears to be a sign of things to come.
The combination of the pandemic and lockdown prior to the stamp duty holiday caused many owners to reappraise their lifestyles and this positive market impact continues to be felt. House prices continue to rise slowly but surely as factors such as needing more space to work from home and looking for more space indoors and outdoors in general continue to boost movement across the UK.
People want more for their money and this shift from city life to more rural climes continues. But this doesn’t mean that everyone is making the move into the deepest countryside – regional cities such as Bristol, Liverpool and Manchester are seeing positive market movement while the towns and cities across the Northern Powerhouse continue to witness confident market trends.
As the regional markets continue to enjoy a huge boost due to this lifestyle change, this trend has been bolstered further by the stamp duty holiday and is set to continue long after the cuts finish. People are thinking more and more in the long-term, and house price trends continue to travel on a positive tract in this aspect.
While the pandemic has driven demand and the stamp duty holiday has fuelled demand further, we still need to be mindful that the economic situation remains delicate and this is likely to be reflected in house prices. As the impact of the pandemic continues to be felt and the government’s furlough scheme soon comes to an end, we cannot reasonably expect a huge jump in house prices. But industry insiders do predict that house prices will continue to rise gently and it is this steady progress that often bodes even better.
Experts predict that we can expect the market to remain “price-sensitive” over the rest of 2020 and into early 2021 but it is this exact type of steady activity that is so reassuring to investors across the board. Instead of staggering highs, which are often followed by plummeting lows, investors can benefit from a reasonably predictable and stable level of activity as market movement and subsequent property investment continues from those who are financially secure and motivated in their property ambitions.
Previous stamp duty deadlines typically show a slowdown immediately after the cut-off date which is inevitable and not a cause for concern as it is simply a reflection of the fact that many buyers will be looking to rush their sales through before the deadline. This means a market slowdown is unlikely to be something more prolonged or meaningful. As our property market is much more resilient than during previous economic crises and property remains a safe, reliable investment, mortgage lenders will continue to offer favourable rates. This means that any short-term slowdown will be easily weathered with things getting back to normal and transaction volumes beginning to rise again shortly after the stamp duty holiday and levelling out by the time we approach Q3.
Along the same vein, while the end of the furlough scheme, future job losses and the end of the stamp duty cuts will inevitably play their part in a short-term slowdown, the market remains strong and this is still a good time to invest into a bricks and mortar investment with consistent returns even during tougher times.
Current activity shows that the stamp duty suspension seems to have revived the housing market and boosted activity as investors, first-time buyers, second home owners and movers are all set to benefit in different ways. Leading estate agents have explained how stamp duty cuts benefits even those whose homes fall outside the threshold. “as it will create a more active pipeline of buyers.”
This increased inertia is set to continue to boost the market beyond the stamp duty holiday end thanks to the pipeline as volume of sales agreed continues to move along an upwards tract. While people may still tread a little more carefully due to the uncertain economic conditions, buyer and seller sentiment and activity has proven that COVID-19 has done little to deter market confidence and instead, the stamp duty holiday has bolstered a flurry of continued activity. With the stamp duty measures also applicable to those buying a second home or investment property where it is payable at just 3%, this is even more positive for ongoing positive market trends.
Research shows that 43% of those aged between 18 and 34 intend to invest in one or more properties before the stamp duty holiday ends, and data from Rightmove and other major property firms and agencies shows that interest in the property market continues to soar. The stamp duty cuts are bringing these investors to market and that impact will be felt after the holiday comes to an end as it has provided opportunities for those who previously may not have been able to take a step onto the property ladder. Increased affordability and profitability are good news for the market – and for property investors – in the long-term, and the future looks bright.
For more information on the opportunities available, contact our team today.
Also published on Medium.
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